WASHINGTON, DC – Today, the Federal Reserve announced an interest rate hike of 0.25 percentage points – the tenth increase in a row – over the dire warnings from a chorus of economists, and lawmakers that higher interest rates will cost millions of Americans their jobs and usher in a deep recession, while doing little to address inflation drivers like corporate profiteering. Government watchdog Accountable.US renewed its calls on the Fed to abandon its strategy that is doing far more harm than good for the economy and American workers.
The Fed’s interest rate hiking spree is killing jobs, reducing wages, and welcoming a recession. Despite mounting economic red flags, the Fed keeps doubling down on a strategy that is failing to root out a key culprit of rising costs: corporate greed. Major cracks are forming in the economy under the pressure of punitively high interest rates. It’s irresponsible for the Fed to wait until the economic dam bursts before cutting their losses. Needlessly pushing 2 million Americans into the unemployment line is not worth an effort that has yielded nothing but diminishing returns for the economy. Before more damage is done to workers, the Fed needs to slam the brakes and let Congress and the administration take steps to deal with corporate profiteering that’s driving up costs.”
Liz Zelnick, Director of Accountable.US’ Economic Security & Corporate Power program.
Cracks Forming In Economy Under Sky High Interest Rates: According to the New York Times: “[M]anufacturing is suffering something of a hangover as retailers burn through bloated inventories. Inflation-fighting efforts by the Federal Reserve […]have squelched big-ticket purchases. New orders have been declining since last summer, and a widely followed index of purchasing activity has been downbeat for six months.”
This comes as “job openings fell more than expected in March to lowest level in nearly two years.” The Federal Reserve’s own projections in December found that higher rates will drive up the unemployment rate to 4.6 percent – costing at least 2 million Americans their jobs.
Corporate Profiteering Unfazed By Higher Interest Rates: According to the Wall Street Journal: “Inflation has proved more stubborn than central banks bargained for when prices started surging two years ago. Now some economists think they know why: Businesses are using a rare opportunity to boost their profit margins. […] Inflation rates also remain uncomfortably high in the U.S. and many other parts of the world despite interest-rate rises that have gone further and been delivered more quickly than at any time since the 1980s. […] [T]here are signs that companies are doing more than covering their costs. According to economists at the ECB, businesses have been padding their profits. That, they said, was a bigger factor in fueling inflation during the second half of last year than rising wages were. […] Last month, Procter & Gamble said it had boosted its profit margins in the first three months of the year, thanks in large part to higher prices.”