Federal Reserve

Summers: Why the Fed should not raise rates

Larry Summers: Why I'm worried

A rates increase by the U.S. Federal Reserve would not be feasible at this time, Larry Summers said.

"There's no reason to slow down the economy, except to serve a purpose," Summers told CNBC's "Squawk on the Street" on Thursday. "The criteria should be: 'Don't hit the brakes until we see see a barrier we're worried about crashing into.' "

The Fed said on Jan. 28 that it would remain "patient" on raising rates but noted the U.S. economy was strengthening.

Read More Shifting goal posts on employment may signal slower Fed rate hikes

The economist, former secretary of the U.S. Treasury and president of Harvard University also said the Fed should not raise rates because wages are not growing fast enough, the United States' middle class is still struggling and inflation has yet to reach the central bank's target. "If you look at core inflation, and you take out housing, there's really no price increases at all," he said. "There's no reason to tighten until we see the whites of inflation's eyes. I don't know when that moment will come; I'm not sure it won't come soon."

Several countries, including the U.S., have paid the price for raising rates prematurely, Summers added. "The Fed was itching to get out of abnormal monetary conditions in 1937, and it produced a recession that made the [Great Depression] seem great," he said. "In Europe, in 2011, they felt the need to normalize monetary conditions, even though inflation hadn't taken off. They ended up regretting it."

Summers also warned against a possible tip-over toward deflation. "If we made a mistake and the economy tipped over toward deflation, what we've seen in Europe [and] Japan suggests that could be catastrophic," he said. Another element that could trip up fiscal and monetary policymakers is the world we live in, as the world is coming off a global economic meltdown, Summer also said. "We're in an extraordinarily uncommon and unusual place ... so this is not the time for the traditional central bank playbook."

Larry Summers: Not time for traditional Fed playbook