Pimco’s El-Erian Says Bank Tests a Good Signal for Economy

Pimco’s El-Erian Says Bank Tests a Good Signal for EconomyPacific Investment Management Co.’s Mohamed El-Erian said the Federal Reserve’s stress tests on financial institutions were a good sign for an economy that may still receive another round of asset purchases from the bank.

“They were credible and unambiguously this is good news,” El-Erian, the chief executive officer of the world’s largest manager of bond funds, said of the bank tests during an interview on Bloomberg Television’s “In the Loop” with Betty Liu. “The big hope for everybody is that they’ll start lending into the real economy.”

“Our own view is that QE3 will probably materialize down the road simply because the endogenous engines of growth, while they are picking up, are not strong enough yet given all the headwinds faced that face the U.S. economy,” El-Erian said.

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