Larry Summers on interest rate hikes: Larry Summers said CPI increases the likelihood that the Fed’s next action will be a hike.

Former Treasury Secretary Lawrence Summers said the US consumer price inflation report for March meant the risk case for the next Fed hike move should be taken seriously.

“We have to take seriously the possibility that the next rate move will be upward rather than downward,” Summers said on Bloomberg TV’s Wall Street Week with David Westin. He noted that the likelihood is in the 15 to 25 percent range.

Summers said both the headline and core consumer price indexes released Wednesday exceeded economists’ forecasts for March. He highlighted the acceleration of the so-called supercore services measures that Fed policymakers are focusing on – which eliminate food and energy along with shelter costs.

“Given current facts, a rate cut in June is likely to be a risky and serious mistake comparable to the mistakes the Fed made in the summer of 2021,” said Summers, a Harvard University professor and paid contributor to Bloomberg TV. “There is no need for a rate cut right now.”

Summers noted that the situation could still change through June, with economic indicators likely to reverse and financial markets likely to decline. He said the odds of a Fed rate cut this year remain favorable, but “not as much as is priced into the market.”