Larry Summers says the Fed's job is 'much closer to being done', but 'it's a bit premature' to take a break
Former Treasury Secretary Lawrence Summers said on Friday that the Fed's work to contain inflation was about to be done, and also mentioned an important looming macroeconomic indicator to watch.
What happened: The good news is that there was some wage moderation, Summers said in an interview with Bloomberg. At the same time, beware of false auroras, he warned.
Inflation at the 6% level was seen as a step in the right direction, but is still incredibly high by the standards of two or three years ago , Summers said. He added that he stands by his view that a recession this year is more likely than not.
"But looking at some of these trends, you have to think that the job of the Fed is much, much closer to being done, seems much, much closer to being done in terms of disinflation than a few months ago," Summers said. The more optimistic possibilities, which he does not subscribe to, seem more plausible today than they did several months ago, he he added.
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On Data Watch: Summers said data should be watched "very, very" closely. He noted that the Employment Cost Index data due on the last day of the month is a "benchmark measure" of labor costs and wage pressure.
"And that's a number they're going to be looking at very, very closely at the Fed and I guess on Wall Street," Summers said. "And I'll definitely be up early that morning to get that number right after."
When asked if the Fed was at least talking about a pause, Summers replied, "We're not quite there yet." A break in February would not be well advised, and a final decision need not be made beyond February, he said.
"Again, I think the most important thing is to make sure that the job of controlling inflation is done and that they maintain their credibility," said the former head of the Treasury.
"So I think it's a little premature at this point to think about taking a break, but we're getting a lot closer to that day."
Read next: Larry Summers says US is heading for "different" financial era; Story Of Our Times "Important Part" ChatGPT Calls
Photo: courtesy of Chatham House on flickr
© 2023 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Former Treasury Secretary Lawrence Summers said on Friday that the Fed's work to contain inflation was about to be done, and also mentioned an important looming macroeconomic indicator to watch.
What happened: The good news is that there was some wage moderation, Summers said in an interview with Bloomberg. At the same time, beware of false auroras, he warned.
Inflation at the 6% level was seen as a step in the right direction, but is still incredibly high by the standards of two or three years ago , Summers said. He added that he stands by his view that a recession this year is more likely than not.
"But looking at some of these trends, you have to think that the job of the Fed is much, much closer to being done, seems much, much closer to being done in terms of disinflation than a few months ago," Summers said. The more optimistic possibilities, which he does not subscribe to, seem more plausible today than they did several months ago, he he added.
See also: Best Depression Actions
On Data Watch: Summers said data should be watched "very, very" closely. He noted that the Employment Cost Index data due on the last day of the month is a "benchmark measure" of labor costs and wage pressure.
"And that's a number they're going to be looking at very, very closely at the Fed and I guess on Wall Street," Summers said. "And I'll definitely be up early that morning to get that number right after."
When asked if the Fed was at least talking about a pause, Summers replied, "We're not quite there yet." A break in February would not be well advised, and a final decision need not be made beyond February, he said.
"Again, I think the most important thing is to make sure that the job of controlling inflation is done and that they maintain their credibility," said the former head of the Treasury.
"So I think it's a little premature at this point to think about taking a break, but we're getting a lot closer to that day."
Read next: Larry Summers says US is heading for "different" financial era; Story Of Our Times "Important Part" ChatGPT Calls
Photo: courtesy of Chatham House on flickr
© 2023 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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