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Former US Treasury Secretary Summers: The extent of interest rate cuts in the next few years is expected to be less than the Federal Reserve's forecast

Bitget2024/09/19 23:13

Former US Treasury Secretary Summers stated that inflation could cause the Federal Reserve to cut interest rates less than expected in the coming years. He said, "In terms of monetary policy, if the Fed wants to actually cut interest rates as much as it predicts, it faces the risk of rising inflation." The median federal funds rate predicted by Fed policymakers in the latest dot plot for the end of next year is 3.4%, which may be a further 150 basis points reduction on top of Wednesday's announced 50 basis point cut. Summers pointed out that once inflationary pressures reappear, then interest rates will not drop as much as officials predict in their dot plots. He also warned investors have overestimated how much easing they can expect from the Fed going forward.

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