Economist Mohamed El-Erian said the Fed failed to slow down its aggressive pace of rate hikes in time, and now the central bank’s credibility is at stake as a series of banking crises intensifies. The Allianz and Gramercy consultant said he believed the recent crisis in the banking sector was the result of a combination of three different factors. “One is a series of bank management issues and regulatory failures,” El-Erian said Wednesday on CNBC’s “Squawk Box.” “Then, taking a step back, we recognize that neither the private sector nor the public sector have adjusted enough to deal with mishandled changes in the monetary policy regime.” The “wiggle” between the two has contributed to the recent market instability. “The Fed’s recent missteps have exacerbated interest rate volatility in a situation that already has economic and financial liquidity … while stocks are waking up to what the bond market has been waking up to over the past few days, [which] But it’s not just one or two institutions.What we’re seeing in one or two institutions exposes something bigger that we have to deal with, including that the banking industry is changing because of what’s happening right now,” El-Erian said. The massive sell-off came after the Swiss bank, already embroiled in a string of regulatory scandals, said its biggest investor, the National Bank of Saudi Arabia, could not provide it with any further financial assistance. The news reignited a plunge in U.S. bank stocks that began last week, Problems at Silicon Valley Bank and Signature Bank. As the Fed continues to digest new economic data showing its stance on fighting inflation, El-Erian sees the institution’s credibility at stake after it “didn’t slow down in time” [and] Slam on the brakes. “What the current Fed has failed to do is step back and look at the bigger picture.”It’s been captured by an outdated monetary framework,” El-Erian said. “We’ve got what I think [a] The financial sector has taken hold of monetary policy over the past few years, which is why we’re in trouble. “