The Fed won't slow its rate hikes because the economy is still strong enough to take more tightening, top economist Mohamed El-Erian says

• The Fed won't slow down its rate hikes as the economy is strong enough to tolerate more tightening, Mohamed El-Erian said.
• "I think the Fed is going to welcome the latest print, but it's not going to slow down in any significant manner," the top economist told CNBC.

Investors shouldn't be too uplifted by signs of cooling inflation: the Federal Reserve likely won't slow down their rate-hiking regime because the economy is still strong enough to take more monetary tightening, top economist Mohamed El-Erian said.

Instead of pulling back, the central is going to have to "consolidate its gains," he said in an interview on CNBC, noting the July consumer price index came in better than expectations. "They can't celebrate."

Indeed, San Francisco Fed President Mary Daly said Wednesday that it was too early to "declare victory" on inflation.

"I think the Fed is going to welcome the latest print, but it's not going to slow down in any significant manner," El-Erian said.

He expects the next Fed rate hike to be "somewhere between" 50 and 75 basis points, saying that's still substantial given that the last two increases were 75 points.

The July CPI report that showed cooling inflation as well as last week's payroll report that showed 528,000 new jobs were added last month indicate that Fed policymakers "can continue doing what they're doing because the underlying strength of the economy is still significant."