Top economist Mohamed El-Erian shifts stance on inflation and now thinks it has peaked as recession looms

Top economist Mohamed El-Erian told CNBC on Friday that inflation in the US has peaked.
"The problem is that inflation is going to come down with growth probably going into a recession, and that's not good news."
Last month, he said inflation hadn't peaked yet amid high energy prices.

Top economist Mohamed El-Erian said inflation has likely hit its ceiling in the US after warning last month it had yet to peak.

He noted that the global economy is slowing rapidly while central banks are tightening policy, which should have their intended effect on inflation.

"I think inflation has peaked in the US, at least for the next three to four months. We've got to see how sticky some elements are," El-Erian told CNBC on Friday. "But the problem is not that inflation is going to come down — that's a really good thing. The problem is that inflation is going to come down with growth probably going into a recession, and that's not good news."

The comments signal a shift in views for the closely followed commentator, as he told Bloomberg last month that high prices had more room to play out.

At the time, he accurately predicted that inflation would exceed 8.5% in May and continue to accelerate, citing rapid gains in energy prices and broadening pressures. In fact, the Consumer Price Index for May showed an 8.6% increase, and then it climbed further to 9.1% in June.

But he added that inflation likely would not peak as early as July. "It's way too early to say inflation has peaked," he said last month.

Since his forecast in early June, gas prices have dropped steadily for more than a month, suggesting inflation could soon follow suit.

Meanwhile, El-Erian noted in a separate column on Friday that the Federal Reserve must improve its analysis, forecasts, policy responses and communication, or else risk making more policy mistakes.

"There are signs that the global economy is slowing in a rapid fashion, and central banks are hiking and doing [quantitative tightening] into the slowing economy, and that just heightens the policy mistake we're in the middle of with respect to central banks," he wrote.

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