Summers Says Hot Jobs Data Show Neutral Fed Rate ‘Much Higher’
- Former Treasury secretary says economy may be re-accelerating
- Summers says it’s a mistake for Fed to set neutral rate aside
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Former Treasury Secretary Lawrence Summers said that the surge in US payrolls in March illustrates that the Federal Reserve is well off in its estimate of where the neutral interest rate is, and cautioned against any move to lower rates in June.
“This was a hot report that suggested that, if anything, the economy is re-accelerating,” Summers said on Bloomberg Television’s Wall Street Week with David Westin. Alongside other factors including an “epic” loosening in financial conditions, “it seems to me the evidence is overwhelming that the neutral rate is far higher than the Fed supposes,” he said.