Larry Summers Thinks Tuesday's Inflation Print Will Show If There Was Complacency: 'There Are Real Grounds For Concern'

Former Treasury Secretary Lawrence Summers believes Tuesday's consumer price index report will be crucial in determining whether there has been any complacency about inflation.

"There are a lot of different things that could happen with that number and that will be a first reading on whether there has been complacency about inflation at this point. I do think there are real grounds for concern … with super tight labor markets, with some transient element, it seems to be reversing in a number of price components," Summers told Bloomberg TV.

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The former Treasury Secretary also wondered if the Federal Reserve's inflation target could be met without substantial rate hikes.

"And with loose financial conditions, I am not sure we are on a trajectory that’s going to get us to 2% inflation without more interest rate increases than the market is now anticipating," Summers said.

Major Wall Street indices closed over 1% higher on Monday ahead of the release of the consumer price index print. The SPDR S&P 500 ETF Trust SPY closed 1.18% higher while the Invesco QQQ Trust Series 1 QQQ gained 1.6%.

"I think we are headed into what’s likely to be a turbulent period and the CPI could be the beginning of that," Summers said.

High Inflation: Summers' thoughts are in line with other experts who have sounded cautious about inflation remaining high while the economy remains overheated.

Nobel laureate and noted economist Paul Krugman had said some of the temporary factors that were holding inflation down, especially falling used car prices, are probably over and that official shelter prices are still rising fast, even though market rents are probably falling, because of known lags.

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