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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
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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.”