In an interview that aired on Friday’s edition of Bloomberg’s “Wall Street Week,” Harvard professor, economist, director of the National Economic Council under President Barack Obama and Treasury Secretary under President Bill Clinton, Larry Summers said the Federal Reserve “got lost.” talking about the environment and social justice while dismissing inflation concerns in 2021 and he doesn’t think the Federal Reserve’s problems are fully resolved as their projections still show “a degree of very problematic groupthink.”
Summers said: “I think in 2021 our central bank has gone astray. He was talking about the environment. He was talking about social justice in a range of things. She confidently dismissed concerns about inflation as transitory, and she made mistakes in the basic workings of a central bank, including leaning toward very expansionary fiscal policies rather than accommodating them as has been done. does our central bank. So I don’t think we’re… asking too much of our central bank. But I think in 2021 our central bank has let us down pretty badly. And as a result, they find themselves in a very, very difficult position, not least because they no longer have the credibility that they once enjoyed, given their repeated poor forecasting results.
He continued, “And I have to say, it’s not something that’s been fully fixed. Their most recent dot chart suggests that unemployment would reach – only reach 4.1%, even if inflation had come down completely. It seemed highly implausible to me. And the fact that the most pessimistic person of the 19 members of the Open Market Committee said 4.5% seemed to me to suggest a very problematic degree of groupthink.
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