According to Larry Summers, markets are uncertain about the Federal Reserve’s upcoming move.
It is simultaneously confronting the twin challenges of rising inflation and slow growth. In order to prevent the US economy from entering a severe recession, the former Treasury Secretary said the Fed must demonstrate its willingness to be flexible. According to Summers, the available options on 1-year US Treasury bonds indicate that investors believe base rates will remain between 2% and 5%. In an effort to curb inflation that has reached four-decade highs, the Fed has raised interest rates by a whopping 75 basis points at four straight sessions. The base federal funds rate is now 4% as a result of its increases.