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Larry Summers Says US Needs 5% Jobless Rate for Five Years to Ease Inflation

  • Ex-Treasury secretary supports abandoning forward guidance
  • Fears US faces elements of secular stagflation and stagnation
Bloomberg business news
Summers Sees Risk of Being in 'Stagflationary Situation'

Former Treasury Secretary Lawrence Summers said the US jobless rate would need to rise above 5% for a sustained period in order to curb inflation that’s running at the hottest pace in four decades. 

“We need five years of unemployment above 5% to contain inflation -- in other words, we need two years of 7.5% unemployment or five years of 6% unemployment or one year of 10% unemployment,” said Summers said in a speech in London Monday. “There are numbers that are remarkably discouraging relative to the Fed Reserve view.”