Former Minister of Finance Lawrence Sommer believes Inflation is not yet on a safe glide path that could take it anywhere near the 2% target level and said he would not be surprised if the Fed’s interest rate hits 6%.

“So my guess is that interest rates will reach higher levels than the market now expects. That they will certainly reach much higher levels than the Fed anticipated last December. And the data will record again that the Fed underestimated inflation and underestimated how much monetary policy would be needed,” Summers said told CNN.

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The former Treasury Secretary pointed out that this could be risky as “we have historically been unable to achieve soft landings due to significant inflation”.

“We will not allow inflation to accelerate and get out of control. But I suspect that the process of lowering inflation will eventually lead to a recession, as has almost always been the case in the past,” Summers said.

US markets closed mixed on Monday as investors and traders turned their attention federal reserve Chair Jerome Powells testimony before congress on Tuesday and Wednesday. The SPDR S&P 500 ETF Trust SPY closed 0.069% higher during the Invesco QQQ Trust Series 1 QQQ gained 0.11%.

Higher rates: Summers also indicated that he would not be surprised if the fed funds rate hit 6% but said the level probably wasn’t his best estimate.

“My best guess would probably be 5.5% or a little over 5.5%. But 6% wouldn’t really surprise me. And I think anyone who thinks that’s not on the radar screen is making a real mistake in our economy right now, given all the uncertainties that we have. I think what people need to do is just be prepared for a lot of things. The old advice ‘hope for the best but plan for the worst’ is, I think, the right advice for your listeners,” he told CNN.

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