El-Erian says this week's Fed meeting to set stage for June hike

Mohamed El-Erian speaks during an interview at Thomson Reuters in New York March 31, 2011. REUTERS/Shannon Stapleton

NEW YORK (Reuters) - Mohamed El-Erian, the chief economic adviser at Allianz SE ALVG.DE, said on Monday he expects this week's Federal Reserve policy-setting meeting to set the stage for a June interest rate hike.

El-Erian told Reuters: “Fed officials may even be tempted to hike as early this week though this remains a lower probability event.” The Federal Open Market Committee is due to meet Tuesday and Wednesday and then next on June 14-15.

“Notwithstanding the headwinds from abroad, the Fed is likely to hike this year at least once, and possibly twice,” El-Erian said.

Earlier this month, Fed Chair Janet Yellen said the U.S. economy was on a solid course with some hints of inflation, so the Federal Reserve was on track for further interest rate hikes.

“The U.S. economy has continued to progress in a satisfactory way. We continue to see good job performance, some evidence of inflation moving up, so that was our expectation when we raised rates in December,” Yellen said.

Reporting by Jennifer Ablan; Editing by Bernadette Baum