Summers: Odds Are We’ll Have Inflation ‘We Haven’t Seen in 30 Years’ on Current Path

On Friday’s broadcast of CNN’s “OutFront,” economist Larry Summers predicted that unless the Federal Reserve significantly changes monetary policy or something changes current economic growth, “odds are that we’re going to have inflation of a kind we haven’t seen in 30 years” and that it’s “quite unlikely” inflation will go back to a normal level “without some significant change in the path we’re now on.”

Summers stated, “I think the odds are that we’re going to have inflation of a kind we haven’t seen in 30 years until either the Fed takes some significant move with respect to monetary policy or until there’s some kind of accident that disrupts the rapid economic growth we’re enjoying. I think it’s possible, but quite unlikely, that inflation will recede back to its normal 2% level without some significant change in the path we’re now on. I think the Fed has made a significant mistake in the approach that it’s taking by doubling down on the massive fiscal stimulus we had at the beginning of the year with really easy monetary policy.”

He later added, “The current problem is that we’re pushing demand into the economy faster than supply can grow and that we’re just going to get more and more inflation until we stop doing that.”

Follow Ian Hanchett on Twitter @IanHanchett