Former Treasury Secretary Lawrence Summers issued one of his harshest criticisms yet of the Federal Reserve’s slowness in moving to raise interest rates, and warned that policy makers are still presenting forecasts that are unrealistic.
“In 2021, our central bank let us down quite badly,” hurting policy makers’ credibility, Summers said on Bloomberg Television’s “Wall Street Week.” “It made mistakes in the core functioning of a central bank,” including in its failure to lean in against fiscal stimulus last year, he said.
Among the errors has been a “repeated poor forecasting record — and I have to say that it’s not something that’s been fully fixed,” Summers said. The June median Fed official predictions showed inflation coming back toward the 2% target but unemployment only reaching a high of 4.1% by 2024 — a “highly implausible” result, he said.
“Frankly I think in 2021 our central bank lost its way. It was talking about the environment, talking about social justice in a range of things,” Summers, a Harvard University professor and paid contributor to Bloomberg TV, said. “It was confidently dismissing concerns about inflation as transitory.”
Turning to Japan, which has seen its currency tumble to the weakest since 1998 as the Bank of Japan declines to join its peers in tightening policy, Summers said it’s likely to be a challenge to exit the current zero-yield targeting regime.“Sooner or later they’re going to leave the yield curve control strategy and I’m not entirely sure what’s going to happen when they do,” Summers said. “In the meantime, the pressures are likely to build,” with the potential for “an even weaker yen,” he said.
While some emerging markets are also suffering from a strengthening dollar, Summers said that he didn’t see a “systemic” crisis along the lines of 1998. Still, countries with “particularly unsound policies” including Turkey and Argentina are a concern, he said.
United States Latest News, United States Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
PROVINCIAL CONFERENCE AFTERMATH: Former ANC Gauteng secretary Jacob Khawe vows to continue serving the party despite botched re-election bidJacob Khawe’s campaign for re-election as provincial secretary fell flat at the elective conference last weekend when he was not voted in as a member of the provincial executive committee – showing just how cutthroat and unpredictable politics can be.
Read more »
Gambia: Court Sentences Five Former Spies to Death for Jammeh-Era MurderA Gambian court has sentenced five former members of the intelligence service to death for the murder of a political activist during the rule of ex-dictator Yahya Jammeh.
Read more »
Mkhwebane 'rogue unit' recording exposes alleged SSA abuses by her former boss Arthur Fraser | News24The inquiry into Public Protector Busisiwe Mkhwebane's fitness to hold office has heard a recorded conversation between her and the Inspector-General of Intelligence in which serious alleged State Security Agency abuses were detailed. | karynmaughan
Read more »
Former Eskom contractor employees arrested by SIUFour former employees of two multinational engineering firms awarded R2.2bn contracts for Eskom's Kusile power plant in 2015 were arrested by members of the Special Investigating Unit and Asset Forfeiture Unit on Tuesday.
Read more »
Public protector's office dealt a blow as inquiry hears damning evidence from former Sars executiveThe office of the public protector was on Wednesday dealt another blow when former Sars executive Johann van Loggerenberg revealed to a parliamentary inquiry that he had provided the office with evidence of state capture which was ignored.
Read more »