Progressive economists and advocates on Wednesday blasted the U.S. Federal Reserve for hiking the federal funds rate an eighth consecutive time despite fears of a recession and impacts on working people.
"With today's rate hike, the Fed is pushing us dangerously close to an unnecessary recession that would spell disaster for low-wage workers, workers of color, and vulnerable communities," the Groundwork Collaborative declared. "Workers and families shouldn't have to pay the price for inflation."
The Federal Open Market Committee rose the benchmark interest rate to a range of 4.5%-4.75%. The 25-basis-point increase was the smallest hike since March and came amid signs that the U.S. economy is cooling off.
"Chair Powell should pause his interest rate hikes and remember his dual mandate: Fight inflation without throwing millions out of work."
Fed Chair Jerome Powell said that "while recent developments are encouraging, we will need substantially more evidence to be confident that inflation is on a sustained downward path," so "we expect ongoing hikes will be appropriate."
U.S. Sen. Elizabeth Warren (D-Mass.), a major critic of the wave of increases, tweeted that "we want to bring down inflation, but that means landing the plane not crashing it. Chair Powell should pause his interest rate hikes and remember his dual mandate: Fight inflation without throwing millions out of work."
University of California, Berkeley professor and former Labor Secretary Robert Reich explained in a recent video that "the Fed is wrongly obsessing about a wage-price spiral—wage gains pushing up prices—when it should be worried about a profit-price spiral—corporate profits driving up prices."
Longtime opponents of the Fed's strategy on Wednesday renewed calls for not only the U.S. central bank to halt its hikes but also federal lawmakers to get to work battling corporate greed.
Liz Zelnick, director of the Economic Security and Corporate Power program at Accountable.Us, warned that "while the Fed continues to stick to their obsession with job-killing interest rate hikes, the livelihoods of working families are on the line."
"Key indicators show inflation is slowing as our economic recovery remains fragile, which means the Fed's higher rates are only pushing the economy closer to a recession," she said. "Meanwhile, Fed economists have admitted corporations are the real culprit of high costs yet have still refused to relax rate hikes. It's time for the Fed to back down and let policymakers rein in corporate greed rather than risk it all on another rate increase."
Patriotic Millionaires chair Morris Pearl, former managing director at BlackRock, offered a similar critique of Fed policy.
"Today's interest rate hike by the Fed is bad news for the American economy. It's true that raising rates is meant to solve inflation, but that doesn't mean it's the correct course to take right now. Raising rates may cool inflation, but it does so by making everything from mortgages to credit card payments more expensive, which hurts those already suffering the most in today's cost-of-living crisis," he said. "In this case, the cure may be worse than the disease."
"If the federal government is truly committed to slowing inflation without heaping extra pain on the vulnerable, they should go after greedy, ultraprofitable corporations and their C-suite executives," he argued. "Many corporations have used the hype over inflation in recent months to raise prices on consumers and line their pockets. Why else would corporate profits be at a 70-year high?"
"Many corporations have used the hype over inflation in recent months to raise prices on consumers and line their pockets."
Pearl pointed out that "everyone's been complaining lately about how expensive eggs are. The fact that Cal-Maine, the largest egg producer in the U.S., experienced a 10-fold increase in their profits over the last year might just have something to do with it."
As Common Dreamsreported last month, Farm Action raised concerns about "apparent price gouging, price coordination, and other unfair or deceptive acts or practices by dominant producers of eggs" and urged the Federal Trade Commission to investigate the sector, "prosecute any violations of the antitrust laws it finds within, and ultimately, get the American people their money back."
Pearl said Wednesday that "the Fed raising interest rates won't do anything to stop corporations like Cal-Maine from exploiting American consumers, unless they raise them so much as to cause a massive rise in unemployment."
"It is hard to see a scenario where this kind of action does not cause immense pain to the worst off in America," he added. "The Fed needs to back off, and let Congress step in to tackle corporate greed."
This content originally appeared on Common Dreams and was authored by Jessica Corbett.