Summers Warns of ‘Massive Inflation Psychology’ From Trump Rates

Former Treasury Secretary Lawrence Summers warned that President Donald Trump’s bid to assert control over the Federal Reserve and drive down interest rates could trigger a surge in inflation expectations that pushes up long-term borrowing costs.

“I’m not aware of any economist anywhere near the mainstream who is supporting anything like 1% rates in the current environment,” Summers said on Bloomberg Television’s Wall Street Week with David Westin. Such a move “might create some temporary boom in the economy, but would do so at the cost of a massive inflation psychology.”

Trump has called on Fed Chair Jerome ...