Inflation could lead the Federal Reserve to cut interest rates less than expected in the coming years, according to Mr. Summers, the former Treasury secretary. "On the monetary policy front, the Fed faces the risk of higher inflation if it is to actually cut rates as much as it forecasts," he said. Fed policymakers' latest dot plot forecast for the median federal funds rate at the end of next year is 3.4 per cent, or 150 basis points on top of Wednesday's 50 basis point cut. Once inflationary pressures return, rates will not fall as much as officials predicted on the dot plot, Mr. Summers said, cautioning that investors were also overestimating the Fed's next easing.