Washington D.C. – As reported by the Wall Street Journal this week, a recent study by economists at the Federal Reserve Bank of Kansas City discovered many corporations’ “higher markups—the gap between what a firm charges and what it costs to produce an item— was a major driver of inflation in 2021.… [C]ompanies in some cases were raising prices in 2021 in anticipation of future cost pressures, rather than because of market power or outsize demand.”
Yet, Federal Reserve officials have signaled they will stay the course with more aggressive interest rate hikes that have failed to contain this very kind of corporate greed driving up prices on everyday families – all while ignoring a chorus of economic experts that have warned doing so could cost millions of jobs and bring about a recession.
The Fed should listen to their own economists who recognize corporate greed is what’s really driving inflation – a problem that will never be adequately addressed with more job-killing interest rate hikes. Raising interest rates further only creates a new problem: high potential for mass layoffs that could derail the economic recovery. From big drug companies to big utilities, corporations continue to mark up prices on working families despite posting massive profits and rewarding wealthy investors with billions in giveaways. Raising interest rates only hurts hard-working families in the long run by obstructing economic growth and opportunity. Recession is not inevitable, but that all depends largely on deliberate decisions by the Federal Reserve and Chairman Jerome Powell.”
Liz Zelnick, Director of Accountable.US’ Economic Security & Corporate Power program
EXPERTS: DON’T DO MORE HARM THAN GOOD: The Fed’s ill-advised policy has failed to tackle the real culprit behind out-of-control costs: corporate greed. Highly profitable corporations have kept raising prices on working families without justification while rewarding wealthy investors with billions in new handouts. Instead, the Fed wants to keep playing chicken with the economy with sky-high interest rates that more experts warn will lead to millions of layoffs. Throughout the pandemic, the Fed has catered to demands from big banks, hedge funds and other Wall Street special interests at the expense of average working families. If excessive interest rate hikes bring about an otherwise avoidable recession, will the Fed take responsibility – or try to pass the buck as they keep making matters worse?