Washington D.C. – Today, 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, despite warnings from economic experts that doing so would cause a recession and cost as many as 3.2 million people their jobs by the end of 2023. A new analysis from government watchdog Accountable.US juxtaposes hawkish statements from FOMC leadership pushing for higher interest rates against warnings from a wide array of economic experts—including a United Nations body, two Nobel economists, former cabinet officials, and a former Federal Reserve economist— who believe 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.
A chorus of economic experts have warned hiking interest rates again is a recipe for millions of Americans receiving pink slips, yet the Fed has decided to triple down on what is not working. Throughout the pandemic, the Fed should have been acting as stewards of the fragile economic recovery but instead have prioritized demands from big banks, hedge funds and other Wall Street special interests at the great expense of average working families. If excessive interest rate hikes hasten 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
- The United Nations Conference On Trade And Development criticized the Federal Reserve and other central banks for seeking to reduce inflation through interest rate hikes despite the risk of a global recession, with a senior official suggesting it was “‘a very dangerous approach.’”
- Former Federal Reserve Economist and Council of Economic Advisers Senior Economist Claudia Sahm said “it is inexcusable, bordering on dangerous for the Fed to be raising rates so aggressively,” warning it would cause “great pain” without addressing longer-term economic issues.
- Joseph Stiglitz—a Nobel economist and former Council Of Economic Advisers Chairman—warned that hiking rates “‘too high, too fast, too far’” would increase inflation in goods and housing, would make it “‘more difficult’” to invest in inflation-driving supply chain stress, and that corporations would actually continue hiking prices against consumers amid rate increases.
- Nobel Economist Peter Diamond said of interest rate hikes, “‘it seems to me the message is you go slow,’” warning that the Fed’s economic models “‘aren’t as relevant as people are thinking’” and that economic expectations could “‘spin out of control’” if the central bank hikes rates and fails to stem inflation.
As we’ve been documenting for the last year, big-name corporations, especially in the food sector, have continually used the pandemic as an excuse to mark up prices for consumers well beyond the cost of doing business,” added Zelnick. “Why should these grocery giants be taken at their word that this merger will result in more responsible behavior? When faced with the option of passing their success onto working families in the form of lower prices, Big Food has chosen again and again to pad their profits instead.”
The new report follows Accountable.US’ previous research over the last several months on how clear pandemic profiteering and corporate greed from the big oil, meat packing, shipping, retail, clothing, food, trucking and railroad companies are making inflation/supply chain problems worse for everyday consumers.