Larry Summers: 5 Reasons Why Fed May Be Making a Mistake

Larry Summers, the former U.S. treasury secretary who last year said the U.S. should stop printing $100 bills and that the Federal Reserve may need to consider buying stocks to stimulate the economy, said the central bank might be making a mistake by raising interest rates while inflation is still low.

The Fed on Wednesday raised its target rate by 0.25 percentage point to a range of 1 percent to 1.25 percent, the highest in nine years, on signs that the U.S. economy is growing steadily while the unemployment rate of 4.3 percent is at a 16-year low.

Summers is most concerned that inflation isn’t rising strongly enough to indicate healthy demand for products and services. The consumer price index last month rose 1.9 percent from a year earlier. 

“Moving away from inflation targeting to something like nominal gross domestic product-level targeting would be a better idea,” Summers said in



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