HKS Affiliated Authors
Frank and Denie Weil Director of the Mossavar-Rahmani Center for Business and Government
Charles W. Eliot University Professor
Excerpt
Excerpt
Only raise US rates when whites of inflation’s eyes are visible: Aborting recovery and risking a further slowing of price rises is potentially catastrophic. Lawrence Summers, February 8, 2015, Opinion. "I cannot recall a moment when the gap between what markets expect the US Federal Reserve to do and what the Fed itself has forecast it will do has been as large. Markets predict that the Fed will raise rates only to 1.6 per cent by the end of 2017; the Federal Open Market Committee’s average forecast is 3.5 per cent. Such a divergence raises the risk of volatility and poses a communications challenge for the Fed. More important, it raises the question of what should guide future policy..." Link