Central Banks
Summers Says Fed Is ‘Wrong’ on Neutral, Warns on Rate-Cut Bets
- Former Treasury chief says neutral rate more likely above 4%
- Fed officials have projected policy rate at 2.5% long term
Lawrence Summers
Photographer: Ting Shen/BloombergThis article is for subscribers only.
Former Treasury Secretary Lawrence Summers said that the Federal Reserve is well off on its estimate of a neutral setting for interest rates, and that there’s an increasing chance that policymakers don’t end up lowering their benchmark this year.
“There’s something very fundamental that has happened, that I’m not sure that the Fed has fully realized,” Summers said on Bloomberg Television’s Wall Street Week with David Westin. “The neutral interest rate is way above the 2.5% that the Fed likes to talk about.”