Economics
Summers Says Zero-Rate Boundary a Larger Problem Than Recognized
- Former Treasury chief says fiscal policies propping up rates
- Neutral rate has declined even more than others have estimated
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Former U.S. Treasury Secretary Lawrence Summers said interest rates in developed countries are more likely to crash back to zero in future downturns than economists have warned, which would make it difficult for monetary policy to dig economies out of recession.
“The widely recognized problem that we’re likely to have difficulty in the future because of the zero lower bound is substantially more serious than one might have previously supposed,” Summers said Saturday at a conference hosted by the Federal Reserve Bank of Boston.