Former US Treasury Secretary Summers: Future Rate Cuts Likely to Be Smaller Than Fed Predicts
According to Golden Finance, former U.S. Treasury Secretary Lawrence Summers has stated that inflation could limit the Federal Reserve's ability to lower interest rates as much as anticipated in the coming years. He expressed, "In terms of monetary policy, the Fed faces the risk of inflation rising if they are to cut rates as much as their forecasts suggest." Fed policymakers forecast a median federal funds rate of 3.4% by the end of next year in the latest dot plot, implying potential rate cuts of 150 basis points on top of the 50 basis point reduction announced on Wednesday. Summers asserted that interest rates would not decline as much as officials have projected in the dot plot if inflationary pressures reemerge. He cautioned investors against overestimating the Fed's upcoming easing measures.