The worst thing the Federal Reserve can do now is cut interest rates, top economist Mohamed El-Erian says

• The worst thing the Fed could do now is cut rates, according to top economist Mohamed El-Erian.
• Cutting rates to ease banking stress could lead to stagflation and financial instability, he warned.
• El-Erian has been a loud critic of Fed policy, and central bankers responded to inflation too late in his view.

Markets have been upping bets that the Federal Reserve will cut interest rates as soon as this summer as the economy deals with stress from the banking crisis, but that's actually the worst thing the central could do at this point, according to top economist Mohamed El-Erian.