Fed Inflation Risk Puts Summers at Odds With Krugman
(Bloomberg) -- Former U.S. Treasury Secretary Lawrence Summers said he disagrees with fellow economist Paul Krugman’s argument that the Federal Reserve should bide its time before raising interest rates because inflation will prove transitory and it’s not worth risking a recession.
Speaking on Bloomberg Television’s “Wall Street Week” with David Westin, Summers reiterated his view that the Fed is too focused on removing slack from the labor market and, by doing so, is allowing the economy and inflation to overheat.
It’s better to act now and slow the economy than have to clamp down harder later -- when the chance of a deeper recession would be greater, Summers said.
“If you look ahead of you and you see that there might be all the traffic stopped, you start braking your car as early as you can -- even if it means that it’s going to slow you down in the event that there is no traffic jam,” said Summers, a paid contributor to Bloomberg. “That’s, I think, the right way to think about the central bank’s problem right now.”
https://www.msn.com/en-us/money/markets/fed-inflation-risk-puts-summers-at-odds-with-krugman/ar-AAQmPts
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