Former Minister of Finance Lawrence Sommer say the Fed can have a soft landing, but warns it would be a “big mistake” to believe so The economy is “out of the woods”.

in a (n interview on CNN’s”Fared Zakaria GPS,” Summers said, “looks more likely we’ll have a soft landing than it did a few months ago.”

While warning about inflation indicators, Summers said: “They are still unimaginably high from the perspective of two or three years ago and it could still prove quite difficult to get the rest of the way back to target inflation.”

On Friday, the Department of Labor reported an outbreak labor market figures for January. The US added 517,000 jobs last month, well above the average economist estimate of 187,000 jobs.

The unemployment rate was 3.4% and thus below the economic estimate of 3.6%. And wages rose 4.4% year-on-year and 0.3% from December.

Also read: Larry Summers says that the consensus view that inflation will fall significantly is “outside the realm of normal historical experience.”

The Fed hiked interest rates by 25 basis points last week, raising its benchmark interest rate to a range of 4.5% to 4.75%.

Asked if it was worth triggering a recession to bring down inflation, and whether an inflation rate of 3% to 3.5% could become the norm, Summer’s said it was a trade-off between short-term falls in unemployment and permanent ones changes in inflation.

“The benefit that we can get from reducing unemployment is unlikely to be permanent by almost all economic theories,” Summers said. “But if we push inflation up and those inflation expectations become entrenched, we’re going to live with that inflation for a long time.”

Last month, he told Bloomberg said this is a good sign that inflation is beginning to cool, even if the labor market remains resilient.

“I’m still cautious, but with a little more hope than before. Soft landings are the triumph of hope over experience, but sometimes hope triumphs over experience”,…