Summers: Federal Open Market Committee (FOMC) driven by internal politics - 'disturbing'

Former Treasury Secretary and now Harvard academic Lawrence Summers said the result of this week's Federal Open Market Committee (FOMC) meeting was a set of inconsistent decisions and actions.

“I found the Fed’s action a little bit confusing” he said, citing:

• there were arguments for not raising interest rates, but its inconsistent to add two rate hikes to the outlook for the rest of the year and boost the forecast for growth

Summers adds:

• “This meeting felt like it was driven as much by the internal political dynamics of the Fed as by any consistent and coherent reading of the economic situation,”
• “And that was a bit disturbing.”

Summers on the US economy:

• consumer “appears to be running really quite strong at this point.”
• very strong employment data — much faster than population growth
• indicators on wages are a bit mixed, but the ones that seem most reliable” suggest “substantial” strength
• not yet clear evidence of a slowdown in inflation Inflation Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Read this Term coming

Summers was speaking in a Bloomberg TV interview.

---

A confusing and inconsistent FOMC outcome has been a widespread take from plenty of respected analysts.