Summers: Can’t Blame Inflation on Pandemic, War, or Gouging, It’s about ‘Managing the Level of Demand’

On Friday’s broadcast of ABC’s “GMA3,” economist, Harvard Professor, Director of the National Economic Council under President Barack Obama, and Treasury Secretary under President Bill Clinton Larry Summers called on the Federal Reserve to raise interest rates and signal that further interest rate increases are coming and argued that the Federal Reserve can’t blame inflation on the coronavirus pandemic or the war in Ukraine, and the Biden administration can’t blame corporate greed for inflation because, at its core, the issue is about “managing the level of demand in the economy.”

Summers stated, “I think they need to raise interest rates. I think they need to signal that they’re going to do more raising of interest rates. They need to signal that inflation is their top priority. And they need to recognize that they should have been moving to tighten policy much sooner than they have. The Fed can’t blame this on the pandemic or the war, and the administration can’t blame this on corporate greed. This is, fundamentally, about the very delicate task of managing the level of demand in the economy.”

Summers also said that while he believes ending the war in Ukraine will be helpful for the economy, there will be higher levels of inflation over the next year or two.

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