Lawrence Summers, Former Treasury Secretary of the United States and President Emeritus of Harvard University, today called for the Federal Reserve to up its interest rate for the first time in nine years, saying it would be prudent to do so.
“A strong predicate has been laid,” he said, pointing to strong recent macro-economic data that has emerged out of the world’s largest economy, where rates have stayed at near zero since it plumbed into a financial crisis in 2007-2008.
“Central banks have to act in consistent ways to preserve credibility. There have been very clear statements [from Fed officials] towards a rate increase this time,” Summers, who was treasury secretary in 1999-2000 and director of President Obama’s National Economic Council, said.
Summers is in India for a visit and spoke to CNBC-TV18 exclusively.
He also spoke about the slump in oil prices, and said it was the result of a combination of weak demand and strong supply.
“There are also many number of improvements in mining technology and new discoveries,” he said. “So you put those things together, less demand and more supply and you are going to get a lower price and I think that is going to be expected to be with us for some time.”