Larry Summers

The Federal Reserve's policy rate (then 0.25-0.5%) will rise to the 4-5% range by about March 2024.

“My sense of this is that given the likely paths of inflation, we’re likely to have a need for nominal interest rates, basic Fed interest rates, to rise to the 4 percent to 5 percent range over the next couple of years.”

Said on

28 March 2022 · The Ezra Klein Show (New York Times) interview, transcript quoted by Timothy Taylor's Conversable Economist blog

Source

Interview with Lawrence Summers: Inflation and the Economy · Conversable Economist (Timothy Taylor)

Should come true

2024

How sure they sounded

my sense; likely

Categories

MarketsEconomy

Importance

3 of 5 · The size of Fed tightening set US borrowing costs and moved global markets.

Outcome

Accurate Happened 14 December 2022.

The Fed raised the target range to 4.25-4.5% on December 14, 2022 and to 4.75-5% by March 2023, inside the two-year window (markets in March 2022 expected far less). The rate later peaked slightly above his range at 5.25-5.5%, but the forecast was that rates would need to reach the 4-5% range, which they did.

Evidence:

• https://www.federalreserve.gov/newsevents/pressreleases/monetary20221214a.htm
• https://www.federalreserve.gov/newsevents/pressreleases/monetary20230322a.htm