On Friday, former US Treasury Secretary Lawrence Summers revealed the scenarios awaiting the Federal Reserve during the coming period, pointing to the need for the Reserve to pay attention to the repercussions of its decisions on the economy.
“If the Fed does not raise interest rates in June, I think they will have to be open to the possibility that they will have to raise interest rates by 50 basis points in July,” Summers said in a tweet.
The former minister added that the performance of the US economy during this period and the changes that will occur in the inflation rate will be the most important factors that will affect the decision of the Federal Reserve.
And Summers believes that “the strategy that carries less risk for the Federal Reserve is to raise interest rates during June,” expressing fears that the Fed will repeat its mistakes that it made during the last period.
“Looking at the overall picture in the markets, I think we are again in a situation where the risk of economic overheating is the primary risk that the Fed has to watch out for,” Summers said.
And the former Treasury Secretary revealed his fear that Federal Reserve officials “exaggerate the impact and effectiveness of monetary policy in slowing the economy.”
“The general trend of the data leads us to say that the economy – at least for the time being – is reasonably strong,” Summers said.
2023-06-03 01:17:07
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