The the strong data points from the past week led experts to speak of “longer higher rates”. Former Minister of Finance Larry Summer offered his opinion on the data and the near-term development of the Fed’s interest rates.

What happened: The Fed has been trying to put the brakes on and it doesn’t look like the brakes are getting much traction, Summers called in an interview with Bloomberg Television.

He was responding to a question about reconsidering how inflation is handled since it is not coming down anytime soon.

“And when your brakes aren’t getting much traction, two things happen. You can act too quickly,” said the former finance minister, citing mounting inflationary pressures. Alternatively, expect “some sort of collision or crash on the road,” he said, apparently referring to a recession.

“And both of those, I think, are real risks in this environment,” Summers said.

He noted the economy is doing well, with “superstrong” demand, the highest job vacancy-to-unemployment ratio, solid retail sales and job creation outpacing population growth by a factor of five.

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At the same time, the broadest measure of inflation is at its highest level in 40 years and is approaching 7%, indicating generally increasing price pressures, Summers said.

“It raises the possibility that at some point in the next few months we won’t end up at a final rate or that we’ll have to step on the brakes more than 25 basis points harder again,” he said.

However, Summers said the Fed needs to be very careful. He said he doesn’t support the idea of ​​hitting the brakes “very hard” as there’s also the possibility of the “Wily Coyote” moment he’s warned of could be coming in the next few months.

Other options open: When asked about the short-term interest rate trend, Summers said that if it’s moving slowly, not doing it is an option.