Summers says it is wrong to say that the markets say it should be cut

Former Treasury Secretary, Lawrence Summers, said that Bond Market prices do not represent a call to the call to what the Federal Reserve should make with interest rates and that it would be a “very serious mistake” for those responsible for the policies that next week.

“It would have been a grave mistake would have been relieved and it would be a very serious mistake to relieve this next meeting,” said Summers on Bloomberg’s TVWall Street Weekwith David Westin. A reduction of May 7 would harm the FED’s confidence in decreasing inflation, causing long -term loan costs to rise.

Fed President Jerome Powell and his colleagues are expected to stay at the meeting next week, with inflation that was still above its 2% target and the pressures of prices based on the rates of President Donald Trump. Trump has repeated itcriticized PowellFor not being moved this year, arguing that the decrease in energy and other prices justify downhill rates.

On Thursday, Treasure Secretary, Scott Bessent, emphasized that the two -year treasure returns are below the Fed’s reference rate during the night. “So this is a market signal they think the Fed should cut,” Bessent said in an interview with Fox Business.

“It is quite analytically reasoning from two years to what the Fed should do,” said Summers, a professor at Harvard University and a Bloomberg TV collaborator. “I have not studied the commentaries of the Bessent Secretary, but if he was comments that they could reasonably be interpreted as prescriptive with respect to the FED, it seems a fairly unusual choice for a treasure secretary, and a problematic choice.”

Presidential comparison

Bessent reiterated in his appearance that he and the President are focusing on the returns of the ten-year treasure, “heading to this point on the curve.” However, Trump has continued to exploit Powell.

“The president’s advice is really wrong,” both because the Fed will not hear and because political pressure increases long -term interest rates, Summers said. “In many ways, it is worse” that the Treasury Secretary commented on, he added.

“People understand that presidents are political figures who are asked to address all the problems, while thinking of treasure secretaries as sophisticated financial professionals who should know everything about FED’s independence,” said Summers.

The two -year yields were around 3.70% at 13.57 in New York, with an effective federal fund rate of 4.33%. The Fed is currently aiming at the federal fund rate in a range of 4.25% to 4.5%. The yields of ten years was around 4.23%, below 4.5% before Trump took office.

Neil Dutta, responsible for the economic research of Renaissance Macro Research, wrote in a brief note to the clients after Bessent’s statements that “the Treasury Secretary knows how to feel the market. Salary and salary growth is located below the FED’s fund rate level.

Summers said that “it would not argue with the market judgment that the complete set of developments in the economy points to a greater flexibility than it seemed that it would be necessary a month or two ago.” The economy “probably seems softer” than a couple of months ago, at the same time he noticed “worrying signs” of the risk of inflation.

This story originally presented to Fortune.com