Larry Summers isn’t mincing words when it comes to Federal Reserve policy: he thinks it’s way off.
In a stinging new post in the Washington Post’s Wonkblog, the former Treasury Secretary and Harvard economist says the central bank has lost crediblity with financial markets because of its consistently misguided optimism about growth prospects and the Fed’s ability to raise interest rates.
“The Fed is not credible with the markets at this point,” Summers writes. “Its dots plots predict four rate increases over the next 18 months compared with the markets’ expectation of less than two.”
…”The Fed has been highly unrealistic in its forecasts for several years,” he points out.