Lawrence Summers, Barack Obama’s former treasury secretary, warned of a “critical inflation downside” with a brief thread about his considerations on Twitter.
Summers, who served as secretary of the treasury throughout the Obama administration from 2009-2011, bluntly assessed the inflation scenario in the USA.
In a collection of tweets, Summers laid out why the newest CPI numbers are an ominous signal.
The year-over-year inflation charge sits at 8.3%, whereas the month-to-month charge ticked up 0.1%.
The information got here on the identical day the Biden administration hosted a White Home garden ceremony to hail the passage of the Inflation Discount Act.
In March 2021, Summers warned of the attainable inflationary affect of the American Rescue Plan. And he cited a troubling statistic about median inflation.
Summers thinks getting inflation again to 2% would require the Federal Reserve to boost the federal funds charge to 4%. It’s at present 2.5%.
The Federal Open Markets Committee will meet later in September. The anticipation is the physique will increase rates of interest by one other 75 foundation factors.