In May, the economy added 339,000 jobs, but new potential rate hikes from the Federal Reserve could damage that growth by protecting corporate greed that’s been driving up inflation.

Last month, the Fed raised the interest rate for the tenth consecutive time, even after Federal Reserve Chairman Jerome Powell admitted the country could be entering a mild recession. Still, while banks collapsed and concerns over the financial industry mounted, the Fed largely stuck to its assumption that continued interest rate hikes were necessary. Despite the Fed’s persistence, all evidence points to their strategy sparking a job-killing disaster for the economy.

That’s why a chorus of high-profile economists have spent months calling on the Fed to pause rate hikes until the economy could calm down, as the effects of past hikes had yet to filter through the economy. 

Federal Reserve Chair Jerome Powell himself acknowledged these consequences. Last September, leaders at the Fed predicted that an additional 1.2 million people could become unemployed by the end of 2023 as they reaffirmed their plans to raise interest rates. Other projections painted a bleaker picture — two economists from the International Monetary Fund said the number could be closer to 6 million

But even past and future interest rate hikes won’t solve one of the main drivers of inflation: “greedflation.” 

During the height of the pandemic and beyond, corporations have used inflation as an excuse to mark up the price of consumer goods, placing a strain on Americans’ budgets and lining the pockets of wealthy CEOs. Dubbed “greedflation,” companies can shower their executives and shareholders with millions of dollars in additional profits as working Americans struggle to make ends meet. 

Companies set the prices of goods higher than usual to account for the pandemic, but now, their profits remain far above pre-pandemic levels. The food industry is especially guilty of profiteering. In the first quarter of 2023, several companies reported record earnings despite little increase in sales, reflecting price increases beyond inflation. Perhaps Fed chairman Jerome Powell put it best—companies raised prices “because they can.” 

Now, major companies are raking in exorbitant earnings thanks to these increased prices, and consumers are catching on. So are economists and bankers—the discussion around corporate profits and greedflation has undoubtedly widened with new research.

Meanwhile, the Federal Reserve’s strategy has yet to acknowledge greedflation, even as experts have repeatedly stated that hiking interest rates could drive up unemployment, hurt low-income families, and worsen inflation.

These predictions particularly worry marginalized communities, as the past year’s series of interest rate hikes disproportionately hurt low-income and nonwhite families. While wages fell and unemployment climbed, poor and low-income Americans could not adapt to the sharp price increases. 

Even as corporate profits soar, financial instability and unemployment remain a very real threat to working families. If the Federal Reserve truly wants to restore economic growth and stability, it should avoid another interest rate hike that would harm working-class and other disadvantaged Americans.

Follow Accountable.US on Twitter as we track the impact of the Federal Reserve and greedflation on working Americans. 

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