The U.S. Federal Reserve will need to raise interest rates higher than officials are currently projecting if it is to wrestle inflation back under control, former U.S. Treasury Secretary Lawrence Summers said. While the central bank this week increased its benchmark rate by 25 basis points for the first time since 2018 and saw the potential for six more such hikes this year, Summers said central bankers still seem to underestimate the stubbornness of price pressures and will likely need to eventually push borrowing costs higher than inflation.“Ultimately we’re going to need 4%-5% interest rates, levels they’re not even thinking of as conceivable,” Summers told Bloomberg. “They’re recognizing that they’re behind the curve. They’ve still got a long way to go.”
Source: The Bond Buyer
