Mohamed El-Erian: Here's how the Fed can curb stock market volatility

The Federal Reserve is expected to deliver another interest rate hike on Wednesday, with chair Jerome Powell holding a press conference on the US central bank's policy decision right after.

First, the Fed should acknowledge that"while there still is a range of plausible outcomes, there is enough evidence to confirm that the economy is weakening and that the job market is loosening," El-Erian says."Yet inflation is not yet under sufficient control, judging not only from the stickiness of core inflation but the recent edging up of inflationary expectations."

El-Erian added:"It should also clarify that an increase in credit risk would aggravate what has until now mainly been related to interest-rate risk." Three regional banks have failed in the past two months, sparking a crisis of confidence in the sector. This was kicked off with the collapse of Silicon Valley Bank in March, the second-largest banking failure in US history at the time, a record overtaken by the failure of First Republic Bank earlier this week.

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