During an interview broadcast on Friday’s edition of Bloomberg’s “Wall Street Week,” a Harvard professor, economist, director of the National Economic Council under President Barack Obama, and Treasury Secretary under President Bill Clinton Larry Summers said: “We don’t have a lot of evidence.” that there is an underlying downtrend in inflation”, and the Fed “has to do a lot of work”. There is a possibility that the final interest rate will be close to 6%.
Summers stated, “I think more broadly, it seems to me that we don’t have a lot of evidence for an underlying downtrend in inflation. The inflation story seems to me to be a fluctuation around a core inflation rate of 4.5 or 5. And if that’s close to the right, that indicates The Fed has a lot of work to do.”
He added, “I suspect there is a very good chance that we will need to get to a final rate near 6. After all, we have inflation close to 5% and we have interest rates at around 5%. So interest rates and inflation in the same range does not indicate A lot of pressure to bring inflation down. So, I’m very open to changing my mind and I think confident statements about these things are wrong.”
He follows Ian Hanchett on Twitter @employee
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