Earlier this month, former US Treasury Secretary Larry Summers called the Federal Reserve's 50-basis-point cut to interest rates in September "a mistake, though not one of great consequence."

He referenced to the September jobs report — which saw 245,000 non-farm payroll jobs added to the US economy — as one point of caution for the central bank: “Today’s employment report confirms suspicions that we are in a high neutral rate environment where responsible monetary policy requires caution in rate cutting."

Jason Furman, the former Council of Economic Advisers (CEA) Chairman under President Obama, sits down with Seana Smith and Madison Mills to weigh in on Summers' comments and the size of the Fed's first rate cut since 2020.

"Inflation, to me, looks poised arou nd 2.5% and it could be a bit higher than that, which would be a problem for the Fed, or a bit lower than that, which would be completely fine for the Fed," Furman says. "But I do think at this point the inflation risk is larger than the recession risk. And so the Fed needs to have tight policy, it just doesn't need to have policy being as tight as it was last year."

Furman, who is currently a professor at Harvard University's Kennedy School of Government, finds there to still be "a lot of demand in this economy" as the unemployment rate decreased to 4.1% in September. He also maintains that the odds of a soft landing scenario are not fully realized yet.

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This post was written by Luke Carberry Mogan.