The world economy will not sustain 4 Fed rate increases for the year - the former US Treasury Secretary

Head of the Federal Reserve System (Fed) should heed the persistent signals of global markets of raw materials and stocks, “risks are biased downward forecasts,” says American economist Lawrence Summers, former head of the US Treasury.

“I would be surprised if the global economy will sustain comfortable four rate hikes, and I think the markets are in general agreement with me on this,” - said Summers in an interview with Bloomberg, adding that he should be kept ready for a wide range of options.

Four raising the base interest rate in 2016, each time by 0.25 percentage points - the average forecast of the Fed’s leaders before the December meeting. However, since then the situation in global financial markets deteriorated significantly.

At the moment, the leadership of the US Central Bank, “you need to think about insurance in the case of more adverse scenarios,” says Summers.

He also noted a significant risk that the next two years, the Fed will have to deploy the course of monetary policy by 180 degrees and return to incentives.

14 January 2016

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