During an interview on Friday’s episode of Bloomberg’s “Wall Street Week,” economist, Harvard Professor, Treasury Secretary under President Bill Clinton, and Director of the National Economic Council under President Barack Obama, said that he believes inflation will not be brought under control until unemployment reaches a level above the Non-Accelerating Inflation Rate of Unemployment (NAIRU), which he pegged at around 5%. Furthermore, he said he felt that  in order to reach the target level of 2% inflation, the Federal Reserve will have to tighten policy to the point unemployment reaches 6%.

He went on to say that he felt the higher rate of labor force participation is a, “positive development for the economy,” however “my guess is that things are much less good than the Fed has supposed. My estimate would be that the NAIRU is now near 5%. I don’t see how you can fail to think that the NAIRU has risen substantially, when you look at how much there’s been an increase in vacancies at a given unemployment rate…when you look at the big increases in quit rates that we’ve seen, when you look at wage behavior. And I add all that up and I see a difficult situation where I think that, to start bringing down inflation, we’re going to need to get above the NAIRU, that’s probably somewhere in the 5% range. And I think we do have to achieve some meaningful amount of disinflation. So, I’ve said that I’d be surprised if we get to…the 2% inflation target without an unemployment rate that approaches or exceeds 6%.”