The Fed's risk of doing too little to fight inflation is greater than doing too much, top economist Mohamed El-Erian says

• It's too early to start preparing the market for the end of the Fed's tightening cycle, Mohamed El-Erian told Bloomberg TV.
• The top economist pointed to recent job openings data, which showed a surprise increase in September.

The Fed runs a bigger risk of doing too little to fight inflation rather than doing too much, top economist Mohamed El-Erian said, warning it's too early for the central bank to start preparing the market for the end of its tightening cycle.

"There are only a handful of us who think that the risk of doing too little is higher than the risk of doing too much at this stage," El-Erian said in an interview with Bloomberg TV on Wednesday. "Now that we're here, the risk is that they will do too little, and that's the higher risk going forward."

Those comments come a few hours ahead of the Fed's policy announcement, which is expected to show another 75-basis-point increase. It would be the fourth aggressive rate hike of that caliber this year as the central races to lower inflation, which has raised concerns among economists that the Fed will overtighten the economy and plunge the US into a recession.

But inflation remains the predominant concern, according to El-Erian, urging central bankers not to back down.

"I think that inflation is more problematic than what a downshift now would imply," he said, pointing to Tuesday's Job Openings and Labor Turnover data.

The report showed a surprise increase to 10.72 million job openings in September. That's a sign that the economy is still expanding faster than expected, and the Fed has more room to tighten before getting a lid on rising prices.

El-Erian has been a loud critic of the Fed's policy moves this year, previously blasting central bankers for causing the current market turmoil when it could have been avoided by an earlier policy response.

On Wednesday, he said he's unsure of how hawkish Fed officials would continue to be, noting they have regularly surprised markets this year.

"This is a Fed where it's very difficult to figure out how it's anchored," he said, noting that policy makers have tended to drift based on the current market consensus then correct course, sometimes in a "violent manner."

He added, "I don't know what they're thinking. I don't anybody knows what they're thinking."