Summers Urges Faster Fed Taper Plan Given ‘Disturbing’ Inflation
(Bloomberg) -- Former U.S. Treasury Secretary Lawrence Summers urged a faster wind-down of the Federal Reserve’s $120 billion a month bond-buying program, given evidence of persistently high inflation.
“We see inflation becoming more widespread in a wider range of products, speading to the housing and labor markets,” Summers told Bloomberg Television’s “Wall Street Week” with David Westin. “I’ve been alarmed for a long time and I’m more alarmed now.”
This more generalized inflation requires a response by the Fed, said Summers, a paid contributor to Bloomberg. The central bank is behind the curve and “should taper faster than they’re talking about,” he said.
He spoke two days after the Fed published minutes of its latest policy meeting, which signaled that policy makers plan to start scaling back asset purchases in November or December, finishing the process by mid-2022.
“It should be clear the Fed should be moving to tighten much sooner,” Summers said. He said that the consumer price index report earlier this week was “very disturbing” and that so-called median measures of inflation are “on fire.”
The government on Wednesday reported that consumer prices gained 5.4% in September, matching the largest annual rise since 2008.
Summers also reiterated that the Fed should resist calls to try to fight climate change and to seek to fix societal flaws.
“The Fed should stick with its responsibilities for macroeconomic performance,” he said. “When I see it start to broaden much more widely to social justice or to climate issues I get nervous, especially when I don’t think they’ve got it under control on their core responsibilities of sound money and low inflation.”
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