“It would be a mistake not to recognize inflation,” says former US Treasury secretary

Former US Treasury Secretary Lawrence Summers highlighted, during the Expert XP 2022 panel, this Thursday (4), that the rise in prices in the world could be worse if economic leaders did not recognize the strength of inflation and did not seek fight it harshly.

“I think the biggest mistake would be not recognizing that we created an inflation problem and that we have to fight it”, said the American economist.

Summers also said he was hopeful that the Federal Reserve (Fed, the US central bank) “will do what is necessary” to get the US back on track, alluding to a more persistent monetary tightening.

“I believe in a recession in the next 18 months, but I am confident about the amount the Fed will spend [de aumento dos juros] to control inflation, but not for how long”, he declared.

“They believe they will be able to successfully eliminate inflation and reduce it back to 2% without the unemployment rate reaching 4.1%. I think a view that the Fed will be able to control inflation without raising interest rates so much may even happen, but I’ve never seen that in history based on economic theory,” he added.

appreciated dollar

The former US Treasury secretary pointed out that the dollar should remain strong in the coming months, as the currency is more solid than that of other countries and that the US “has more benefits than Europe and Japan”.

“The dollar will remain strong, this is the benefit of a flexible exchange system that we have”, he concluded.

Petroleum

Finally, Summers bet on a rise in the price of a barrel of oil.

“If you ask me about the possibility, I believe the probability is that the price of oil will go up. I suspect that the price will probably rise when looking at what is happening, I see this as a central theme of the markets for inflation”, he pointed out.