Washington D.C. – The Labor Department’s latest Consumer Price Index (CPI) report found that while overall inflation remains persistently high, it cooled slightly by 7.7% in October. In order to protect working families from an engineered economic downturn, the Fed should take a wait-and-see approach, rather than raise rates again. Last week, Government watchdog Accountable.US called on the Fed to ease their overly aggressive policy, which leading economic experts warn could threaten millions of jobs while doing nothing to address the real driver of out-of-control prices: corporate greed.
An updated analysis from Accountable.US spotlights a growing chorus of warnings from a wide array of economic experts, labor leaders, and lawmakers who conclude hiking interest rates too quickly could make inflation worse and further hurt working-class Americans, all while doing little to address inflation drivers like corporate profiteering. Last week, the Federal Open Markets Committee (FOMC), the Federal Reserve body which determines interest rates, announced a 75 basis points interest rate hike, the sixth increase in eight months, over expert warnings that doing so would cause a recession and cost as many as 3.2 million people their jobs by the end of 2023.
The Fed stubbornly insists raising interest rates is the only way to drive down inflation, but we should be focused on corporate greed. Highly profitable corporations have only jacked up prices more on working families while rewarding wealthy investors with billions in new handouts. The Fed should pump the breaks, especially as leading economists warn continued aggressive interest rate hikes could crush millions of jobs. 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 speed up the arrival of an otherwise avoidable recession, will the Fed take responsibility – or try to pass the buck as they keep making matters worse?”
Accountable.US spokesperson Liz Zelnick
Joining the List of Leading Voices Dispelling the Wisdom of Higher Interest Rates:
- UBS Chief Economist Paul Donovan wrote a piece arguing that Fed Chair Jerome Powell was offering “little insight” into how rate hikes tame inflation—saying Powell was “chanting ‘hike, hike, hike’ with malicious glee”—while arguing that inflation was spurred by corporate profiteering.
- After the Fed announced its most recent rate hike in November 2022, AFL-CIO President Liz Shuler warned it would have a “‘direct and harmful impact’” on working families and noted that continued hikes do “‘not address the underlying causes of inflation,’” including corporate profits, the war in Ukraine, and other factors.
- Ahead of the November rate hike, Sen. Elizabeth Warren (D-MA) led a letter signed by three other senators and 10 House members telling Fed Chair Jerome Powell he was raising rates at “‘an alarming pace’” and accused him of a “‘disregard for the livelihoods of millions of working Americans.”
- Ahead of the November rate hike, Sen. Sherrod Brown (D-OH) sent a letter to Fed Chair Jerome Powell arguing that rate hikes that increase unemployment “‘risk the livelihoods of millions of Americans who can’t afford it.’”
- October 2022: Sen. Chris Van Hollen (D-MD) said of interest rate hikes, it’s “‘important that they not choke off the job recovery.’”
- November 2022: Congresswoman Maxine Waters (D-CA), Chairwoman of the House Financial Services Committee, sent a letter to Federal Reserve Chair Jerome Powell urging him to consider the significant pain that rate increases may inflict on families across the country and the impact these increases are having on the cost of housing, which remains a key driver of core inflation.