Summers Warns of Interest Rates Well Above 3% Through 2030

Former Treasury Secretary Lawrence Summers said the economy’s enduring strength in the face of vigorous Federal Reserve tightening makes it increasingly likely that neutral interest rates have risen.

“We’ve got an economy with a lot of underlying strength at interest rates where that would have looked unlikely some time ago,” Summers said on Bloomberg Television’s Wall Street Week with David Westin. Arguments in favor of neutral rates being higher thanks to fiscal deficits, and spending now being less sensitive to the level of borrowing costs, are “tending to be borne out,” he said.