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Central Banks

Summers Warns of 1970s Crisis If Central Banks Relent on Rates

Larry Summers in Davos, Switzerland, on Jan. 19.
Larry Summers in Davos, Switzerland, on Jan. 19.Photographer: Hollie Adams/Bloomberg

Going soft on inflation will plunge economies back into the recessionary depths of the 1970s and have “adverse effect on working people everywhere,” former US Treasury Secretary Larry Summers warned.

The remark is a response to suggestions from economists including Olivier Blanchard, a former International Monetary Fund chief economist, who have suggested lifting inflation targets from 2% to 3% to avoid recessions.