Mohamed El-Erian, a noted economist said that Friday’s Federal Reserve must take immediate bold steps to restore faith that this inflation spike can be controlled. El-Erian said that he needs to take back control over the inflation story… and now he is losing complete control.” El-Erian was speaking on “SquawkBox” of Fed Chair Jerome Powell. “He has to act because if not, he is going to chase the market. He’s not going anywhere.” After a more severe inflation report than expected, he made these comments. Prices rose 8.6% in May, the highest increase since December 1981. Dow Jones polled economic experts and expected an 8.3% increase. The chief economic advisor at Allianz said aggressive rate hikes could help the Fed regain its credibility, adding that the stock market would react negatively initially but would bounce back quickly. El-Erian stated that he believes you can eliminate the inflation risk and interest rate by raising aggressively. However, credit risks must be addressed. El-Erian said, “It will be a V. “We come down first, before we recover.” Two rate hikes totaling 75 basispoints have been implemented by the Fed, with a 50-basis point increase in May. Fed members discussed the possibility of two further 50 basis-point rate increases in the summer and then a retreat in September. But traders have already priced in rate increases following the inflation hot report. El-Erian stated that inflation is not at its peak if you consider the 10th and final days of June, and if those are the predominant measures for the entire month, then the next rate hike will be even more. To stop the inflationary spiral spreading across the economy, something must be done.