The U.S. central bank has embarked on one of the fastest courses in history to raise borrowing costs and slow the economy. Policymakers have already increased the benchmark federal funds rate from near-zero in March to a range of 3.75% to 4%, the highest since the 2008 financial crisis.
Despite the steeper interest rates, inflation is still running near a 40-year high, with the Labor Department reporting that the consumer price index rose 8.3% in September on an annualized basis.
The unrelenting rise in consumer prices may ultimately give the Fed no choice but to hike interest rates above the projected peak rate of 4.6% next year, Summers said during an interview on Bloomberg TV. Read more and see video here.