The Federal Reserve “lost its way” last year as inflation gripped American households and still isn’t being realistic about the impact it will have on the economy, ex-Treasury Secretary Larry Summers warned on Friday.
Summers, who was far ahead of the Fed in predicting price surges over the last year, stepped up his criticism of the central bank after federal data showed inflation spiked to a new peak of 9.1% in June.
“In 2021, our central bank let us down quite badly,” Summers told Bloomberg. “As a consequence, they find themselves in a very, very difficult position, not least because they don’t have the credibility that they once enjoyed given their repeated poor forecasting record.”
“I have to say that it’s not something that’s been fully fixed,” Summers added.
Summers said the Fed’s “dot plot” projecting inflation would return to its 2% target and 4.1% for…
