Larry Summers Says Fed Needs To Signal It's Nearing End Of Rate Hikes: 'Will Be Looking To See Whether...'

Former Treasury Secretary Lawrence H. Summers says he is not sure whether the Federal Reserve will tilt hawkish or dovish but believes the central bank should signal it is nearing the end of raising rates.

In an interview with Bloomberg Television, Summers voiced his stance that he would be looking forward to the statement of the Federal Reserve to get an indication of the central bank’s stance.

“Everybody expects the Fed to move 50 basis points. But the question is going to be what are they going to say about the future -- is it going to tilt dovish or hawkish? I am not sure what the answer to that is. I will be looking to see whether the statement in the press conference this time is going to be in the same direction,” Summers said.

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Major Wall Street indices closed over 1% higher on Monday after last week’s subdued performance as investors brace for consumer price inflation data on Tuesday followed by the crucial Federal Reserve meeting outcome on Wednesday. The SPDR S&P 500 ETF Trust SPY closed 1.44% higher on Monday, while the Vanguard Total Bond Market Index Fund ETF BND closed flat.

Summers also spoke about the mistakes made by central banks in the past. “I think the Fed does need to signal that it is getting to the end of raising rates. But it also signals that it understands that the main mistakes central banks have made in the past has been relenting on tight money before they have inflation fully under control. I will be looking for clear awareness of that issue from the Chair and from the FOMC statement,” Summers said.

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Photo by Brookings Institution on Flickr