Allianz Chief Economic Advisor Mohamed El-Erian believes the Federal Reserve has waited far too long to cut interest rates, and cutting rates before its September policy meeting would do more than spook the markets.

"It could contribute to a recession because people could get more worried and spend less. And that's what we need to avoid. This self-reinforcing negative spiral," the University of Cambridge, Queens’ College president and former PIMCO CEO tells Yahoo Finance.

He views an intermeeting rate cut as signaling "total panic" to the marketplace: "It's not going to happen, but that's what some people want to see. Why is this of concern? Because the economy has been slowing faster than the Fed and others have been anticipating."

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This post was written by Luke Carberry Mogan.