The Federal Reserve needs to remain steadfast in its fight against inflation or risk plunging the economy into a 1970s-style crisis, Larry Summers said.
Lawrence Summers, president emeritus and professor at Harvard University, during a panel session on the closing day of the World Economic Forum in Davos, Switzerland, on Friday, Jan. 20, 2023.has said repeatedly that the central bank remains committed to getting inflation under control and returning it to the 2% target, despite evidence that consumer prices are beginning to moderate.
The easing of prices has raised hopes among Wall Street investors that the Fed could pause its aggressive rate-hike campaign in order to assess the impact on the economy of tighter monetary policy. He added: "The counter-factual is not, 'Can we have more inflation and no recession?' It is, ‘If we fail to deal with inflation, we are likely to have a more severe recession at some point.’"to a range of 4.25% to 4.5% last year in the most aggressive tightening campaign since the 1980s. At their last meeting in December, officials slowed the pace of rate hikes to a 50-basis-point increase, following four straight 75-basis-point hikes.
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