Former US Treasury Secretary Summers: Inflation may surge again, the next step for the Federal Reserve could be a rate hike

Four years ago, former U.S. Treasury Secretary Lawrence Summers criticized U.S. fiscal and monetary policymakers for over-stimulating the economy, leading to the greatest risk of inflation in a generation. Now he is warning again that there is a danger of price pressures breaking out once more. "This may be the most sensitive moment we face for escalating inflation since policy mistakes triggered severe inflation in 2021," Summers said on the TV program Wall Street Week.

Summers pointed out that signs of tension in the job market, including significant wage growth in January's employment data released last week, have already set the stage for potential rebounding consumer prices even before any measures are taken by new government. Since this data was released, President Trump has also raised tariffs on imported goods and threatened to increase a range of other tariffs.

As a Harvard professor and paid contributor to Bloomberg Television, Summers said: "This is a time when we must be very cautious about inflation even before policies are rolled out from White House." He urged Federal Reserve to stay vigilant against price pressures and believed it might not cut interest rates further within current cycle.