Fed nerves will extend past Summers

According to Al Wojnilower, US growth will likely remain at 2 per cent for the next year or more. No wonder hardliner Larry Summers incited fears as potential head of the Fed.

This morning’s sharp rise in the Australian dollar against the US currency is not welcome news for the new government. But it is a reminder that the US has, so far, not responded as vigorously to quantitative easing as was expected. And so with Larry Summers no longer in the running to be US Federal Reserve Bank chief (Summers, one hawk down, September 16), quantitative easing may continue longer than many expected (Why the Fed's wind-back is not irreversible, September 16) – hence the fall in the US dollar.

To understand why the US suddenly became wary of the hardline Summers, the latest remarks of the veteran US economist Al Wojnilower are helpful.

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