On Wednesday, the Federal Reserve announced its monetary policy decision to hold interest rates steady. However, the central bank's dot plot, which outlines projections for future rate movements, pointed toward a potential rate cut in December. To delve deeper into the outlook on Fed rate cuts, Allianz chief economic advisor Mohamed El-Erian joins Catalysts.

El-Erian notes that the Fed is targeting a "soft landing" but acknowledges that "there are two tails" to this scenario, with "risks on both sides." He emphasizes that the Fed must strike a delicate balance between these risks, and the problem lies in the fact that this balance is "in favor" of the Fed pushing rate cuts out.

El-Erian states that a rate cut in December would be "too late." He explains that "by that time, the lagged effects of what was a significant increase in rates would be biting even more." El-Erian also highlights that individuals continue to be strained under high inflation in the aftermath of the pandemic, and the Fed's current timing for rate cuts is heightening that issue.

Watch Yahoo Finance's full interview with Mohamed El-Erian.

For more expert insight and the latest market action, click here to watch this full episode of Catalysts.

This post was written by Angel Smith

Catch up on Yahoo Finance's coverage and reporting of the Fed's interest rate decision from Wednesday, and the central bank's policy outlook for 2024:

How to read the Fed's updated dot plot

The Fed isn't really taking 2 rate cuts off the table

Fed 'dot plot' suggests central bank will cut interest rates one time in 2024, down from 3 cuts in March

Fed trying not to get 'stuck' in inflation: Evercore ISI's Guha

Fed 'dot plot' has 'enormous' utility: Fmr. Dallas Fed pres.

Fed's unanimity, 'lack of debate' is 'troubling': Economist

Fed's December rate cut would come 'too late': Mohamed El-Erian

A September rate cut is 'too close' to election: Strategist

Inflation was the day's real market mover, not Fed policy