Yellen criticizes Summers on inflation: He’s ‘been wrong in the past’
Inflation has “come down substantially from its peak,” Treasury Secretary Janet Yellen said during her testimony before the House panel.
Treasury Secretary Janet Yellen pushed back Tuesday at her predecessor Larry Summers over his recent comments that the Federal Reserve may need to consider hiking interest rates because inflation isn’t trending in the right direction.
“He’s a person who’s been wrong in the past,” Yellen said of Summers during a House Ways and Means Committee hearing. “He said that it would absolutely take a recession to bring inflation down, and that turned out to be a serious misjudgment.”
Summers, a former Treasury secretary who has close ties to the White House but has also been a prominent critic of its economic policies, said earlier on Tuesday in a post that inflation “is not securely trending to target levels.”
Summers said he was concerned that “shelter inflation is not durably declining” and that the Fed “should be very cautious about possible rate cutting.” Earlier this month, he said it was a serious possibility that the Fed may need to hike rates.
Yellen, by contrast, has said publicly she believes inflation will continue to cool and that it would be possible for the U.S. to bring down price increases without hurting the job market.
Inflation has “come down substantially from its peak,” she said during her testimony before the House panel.
“I don’t want to talk about appropriate monetary policy,” Yellen, a former Fed chair, said in response to Rep. David Kustoff (R-Tenn.) who asked for her reaction to Summers’ comments. “That’s not my job, it’s up to the Fed.”
Yellen said she thought it was “highly likely” that housing costs, a major driver of inflation, “will come down considerably” in the coming year.
“Rental prices have stabilized and in some cases declined,” she said, though she added that it could take some time for those changes to be reflected through the market as tenants negotiate new leases.
A spokesperson for Summers did not immediately have a comment.