Source: Golden Hour Data

Four years ago, former U.S. Treasury Secretary Lawrence Summers criticized U.S. fiscal and currency makers for overstimulating the economy, leading to the largest in a generation Risk of inflation outbreak. Now he warns again that price pressures are at risk of breaking through again.

Sumers said on Wall Street Week TV: "This is probably the most sensitive moment we are facing inflation escalation since the mistakes caused severe inflation in 2021." p>

Sumers noted that signs of tension in the job market, including a sharp increase in wages in January job data released last week, have provided a backdrop for a potential rebound in consumer prices, even before any new measures are taken The same is true. Since the data was released, U.S. President Trump has also raised tariffs on imported goods and threatened to increase a range of other tariffs. "This is a time when we have to be very cautious about inflation -- even before the White House," said Summers, a Harvard professor and a paid contributor to Bloomberg TV. He urged the Fed to pay for prices Pressure remains vigilant and believes there may be no further rate cuts in the current cycle.

Feder Chairman Powell reiterated his view last month at a Senate hearing Tuesday that the Fed does not have to rush to cut interest rates after it cuts its benchmark interest rate by 1 percentage point in the last few months of 2024.

Sumers said: "This is not a probability, but there is a very real possibility that the next move of the Fed will be to raise interest rates, not lower interest rates. For any form of cost Shock, any form of speech that undermines the credibility of inflation, any form of fiscal irresponsible measures, is a particularly dangerous moment. ”

At the beginning of 2021, Summers warned, Biden's $1.9 trillion fiscal plan has the potential to fuel inflation, which has upset some Democratic colleagues. He also criticized the Fed for not paying enough attention to price risks. Powell admitted in March 2022 that "in hindsight, we should raise interest rates earlier." By contrast, Biden's team continues to defend their approach. Former Finance Minister Janet Yellen believes that the bigger mistake is not enough, which leads to the labor market being scarred for years.

Now, many economists warn that Trump’s move to deport undocumented immigrants and strengthen border controls may increase labor market pressure. Tariff hikes may also lead to at least one-time price increases, if not continuous increases.

January employment report showed that jobs increased by 143,000, lower than the median forecast for economists. But Summers noted that the revised jobs increased by 100,000 in the first two months, with the San Francisco Fed's weather-adjusted estimate showing that the number of jobs increased by more than 200,000 last month.

The former Finance Minister said: "This is moreThe economy can absorb regularly quickly, especially on immigration. Therefore, it is not very surprising that wage growth has increased significantly. "Average hourly wages for the month climbed 0.5% from December, exceeding all forecasts.

He also noted that the University of Michigan survey showed signs of rising inflation expectations. Another survey by the New York Fed on Monday It also shows that price expectations have increased.