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Summers Says Powell’s Call on Neutral Fed Rate ‘Indefensible’

  • Powell said Wednesday’s hike brought policy rate to neutral
  • Former Treasury chief worries Fed still has ‘wishful thinking’
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WATCH: Former Treasury Secretary Lawrence Summers says Fed Chair Powell’s assessment that the Fed had already reached a “neutral” setting is “analytically indefensible.”Source: Bloomberg
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Former Treasury Secretary Lawrence Summers said he was concerned the Federal Reserve is still engaging in “wishful thinking” about how much it will take to bring inflation down from four-decade highs.

“Jay Powell said things that, to be blunt, were analytically indefensible,” Summers said on Bloomberg Television’s “Wall Street Week” with David Westin. “There is no conceivable way that a 2.5% interest rate, in an economy inflating like this, is anywhere near neutral.”