Larry Summers thinks the Fed will keep rates unchanged at the November meeting, but the December meeting is uncertain.  He also addresses the magnitude of losses the Fed has on its Treasury purchases.

Dr. Summers agrees with Chairman Powell.  However, the Fed will have to engage with the markets about the enormity of Treasury debt.  The real neutral rate should be in excess of 1.5%.  Also, the term premium rise is putting breaks on the economy the Fed would otherwise have had to provide by raising short-term rates.  He thinks the Fed is “stepping gingerly” because of the rise of long-term rates of which the true causes are trying to be determined.  Also, the Fed is telling banks through its policies not to buy Treasuries.  Foreign Holders aren’t buying as well.

So the Fed also needs to watch the Treasury market closely to make sure it’s functioning properly.