{"id":1391031,"date":"2022-03-21T07:41:32","date_gmt":"2022-03-21T11:41:32","guid":{"rendered":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=1391031"},"modified":"2022-03-21T07:44:58","modified_gmt":"2022-03-21T11:44:58","slug":"larry-summers-warns-interest-rates-need-to-go-a-lot-higher","status":"publish","type":"post","link":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/larry-summers-warns-interest-rates-need-to-go-a-lot-higher\/","title":{"rendered":"Larry Summers Warns Interest Rates Need to Go a Lot Higher"},"content":{"rendered":"<aside class=\"mashsb-container mashsb-main mashsb-stretched\"><div class=\"mashsb-box\"><div class=\"mashsb-count mash-medium\" style=\"&quot;\"><div class=\"counts mashsbcount\">22<\/div><span class=\"mashsb-sharetext\">SHARES<\/span><\/div><div class=\"mashsb-buttons\"><a class=\"mashicon-facebook mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/www.facebook.com\/sharer.php?u=https%3A%2F%2Fwww.conservativenewsdaily.net%2Fbreaking-news%2Flarry-summers-warns-interest-rates-need-to-go-a-lot-higher%2F\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Facebook<\/span><\/a><a class=\"mashicon-twitter mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/twitter.com\/intent\/tweet?text=&amp;url=https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=1391031&amp;via=ConservNewsDly\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Twitter<\/span><\/a><a class=\"mashicon-subscribe mash-medium mash-nomargin mashsb-noshadow\" href=\"#\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Subscribe<\/span><\/a><div class=\"onoffswitch2 mash-medium mashsb-noshadow\" style=\"display:none\"><\/div><\/div>\n            <\/div>\n                <div style=\"clear:both\"><\/div><\/aside>\n            <!-- Share buttons by mashshare.net - Version: 4.0.47--><div><\/div>\n<p>Former U.S. Treasury Secretary Lawrence Summers has been warning about the dangers of an inflationary spiral in the U.S. economy for more than a year, driven largely by what he saw as excessive pandemic relief spending under the Biden administration. Now he\u2019s predicting the Federal Reserve will have to raise rates more dramatically to deal with the problem.<\/p>\n<p>\u201cUltimately we\u2019re going to need 4-5% interest rates, levels they\u2019re not even thinking of as conceivable,\u201d Summers <a href=\"https:\/\/www.bloomberg.com\/news\/articles\/2022-03-18\/summers-says-fed-will-need-to-hike-to-4-5-to-cool-inflation\" rel=\"nofollow noopener\" target=\"_blank\" data-ylk=\"slk:told Bloomberg Television\" class=\"link\">told Bloomberg Television<\/a> Friday. \u201cThey\u2019re recognizing that they\u2019re behind the curve. They\u2019ve still got a long way to go.\u201d<\/p>\n<p>The problem is simple, Summers says: To beat inflation, the Fed has to raise interest rates higher than the rate of inflation, which he thinks will persist at levels above the Fed\u2019s 2% target rate.<\/p>\n<p>\u201cIf you want to tighten policy you have to raise interest rates by more than inflation went up,\u201d Summers said. \u201cWe\u2019ve got to raise interest rates by more than 4 percentage points, we\u2019ve got to raise them by 4% to stay neutral and we probably have to raise them more than that.\u201d<\/p>\n<p>Unlike Fed chair Jay Powell, Summers doesn\u2019t think inflation will fade on its own, at least not in the near term. \u201cI don\u2019t think we can count on the transitory inflation view,\u201d he said.<\/p>\n<p>And Summers is convinced that more inflation is on the horizon. \u201cPerhaps we\u2019re moving in the right direction,\u201d he said, \u201cbut I think there\u2019s a long way to go, and I don\u2019t think the Fed has really done all that will be necessary to preserve its credibility in the face of the substantial inflation that I think is likely to come to us.\u201d<\/p>\n<p><b>Fed officials call for bigger hikes: <\/b>St. Louis Federal Reserve President James Bullard, the lone dissenting vote in this week\u2019s decision to raise short-term rates by a quarter-point, has been pushing the central bank to move more aggressively on inflation, and on Friday said he thinks the Fed needs to raise its interest rate target for the year.<\/p>\n<p>\u201cI recommended that the Committee try to achieve a level of the policy rate above 3% this year,\u201d he said in a <a href=\"https:\/\/www.stlouisfed.org\/on-the-economy\/2022\/mar\/bullard-explains-recent-fomc-dissent\" rel=\"nofollow noopener\" target=\"_blank\" data-ylk=\"slk:statement\" class=\"link\">statement<\/a>. \u201cThis would quickly adjust the policy rate to a more appropriate level for the current circumstances.\u201d<\/p>\n<p>Bullard also wants the bank to raise rates more rapidly, by half a percentage at a time, at least initially. Federal Reserve Governor Christopher Waller seconded that view Friday, <a href=\"https:\/\/www.cnbc.com\/2022\/03\/18\/fed-governor-waller-says-half-point-rate-hikes-could-be-needed-to-tame-inflation.html\" rel=\"nofollow noopener\" target=\"_blank\" data-ylk=\"slk:telling CNBC\" class=\"link\">telling CNBC<\/a> that although he voted for the smaller quarter-point hike this week based on geopolitical concerns, bigger hikes should be on the table at future meetings.<\/p>\n<p>\u201cThe data\u2019s basically screaming at us to go 50,\u201d Waller said. \u201cI really favor front-loading our rate hikes, that we need to do more withdrawal of accommodation now if we want to have an impact on inflation later this year and next year. So in that sense, the way to front-load it is to pull some rate hikes forward, which would imply 50 basis points at one or multiple meetings in the near future.\u201d<\/p>\n<p><b><a href=\"http:\/\/www.thefiscaltimes.com\/Subscribe-Our-Newsletter\" rel=\"nofollow noopener\" target=\"_blank\" data-ylk=\"slk:Like what you&#039;re reading? Sign up for our free newsletter\" class=\"link\">Like what you&#8217;re reading? Sign up for our <span>free newsletter<\/span><\/a><\/b>.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Former U.S. Treasury Secretary Lawrence Summers has been warning about the dangers of an inflationary spiral in the U.S. economy for more than a year, driven largely by what he<\/p>\n","protected":false},"author":1,"featured_media":2315279,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","fifu_image_url":"","fifu_image_alt":"","footnotes":""},"categories":[],"tags":[],"class_list":["post-1391031","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry"],"_links":{"self":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1391031","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/comments?post=1391031"}],"version-history":[{"count":0,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1391031\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media\/2315279"}],"wp:attachment":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media?parent=1391031"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/categories?post=1391031"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/tags?post=1391031"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}