- Sherrod brown, Senate Banking Chair expressed concern at the Fed’s inflation fighting tactics.
- He suggested that raising interest rates could be too aggressive, triggering job losses.
- Powell, Fed Chair, has stated that raising interest rates is the best way for prices to drop.Â
It’s the Federal Reserve’s job to combat rising prices in the country — but a top Democratic lawmaker isn’t happy with the way it’s choosing to do so.
Senator Banking Chair Sherrod brown sent an email Tuesday requesting a Let me knowJerome Powell, Fed Chair, expressed concern about the central bank’s methods of fighting inflation. The Fed is tasked with maintaining full employment, along with stabilizing prices, but Brown said that the recent interest rate hikes — intended to slow price growth by slowing down economic activity — could compromise the goal of maximum employment and cause a stream of job losses.
Brown stated that the Federal Reserve’s tools are designed to lower inflation by decreasing demand for economic activities that are sensitive to interest rates. “However, the ‘pocketbook” needs of a family have little to do about interest rates. The potential job losses caused by monetary over-tightening for the working class will only worsen these problems.”
For working Americans already suffering from the inflation crush, job losses could make matters worse. He added that it was impossible to risk the existence of millions of Americans without their help.
Brown’s letter is sent ahead of the Federal Open Market Committee’s (FOMC) meeting next Wednesday, where Powell will likely announce another interest-rate hike. The committee raised rates last month. 0.75 percentage pointsThe Fed’s normal uptick was three times greater than this. It is indicative of its aggressive tactics in tackling inflation. However, it could trigger a severe recession. This could result in job losses that lower income households will have difficulty recovering from. Brown wrote that higher-income households are better equipped to protect their wealth during economic downturns as well as seize future wealth-building possibilities when the economy recovers.
“Due to these disparities, inflation and recessionary jobs losses increase the gap among upper- and lower income households and widens the divide between races,” he wrote.
Others Democratic lawmakers also expressed concern about the Fed’s inflation-fighting strategies. Earlier this month, Vermont Sen. Bernie Sanders told NBC that the central bank is “hurting the situation. He said that it was wrong to say that we will deal with inflation by increasing unemployment and lowering wages. CNN was also told by Elizabeth Warren, a Massachusetts senator, that she is worried about the Fed’s plans to plunge the economy into recession.
Powell is still a strong advocate for in Prior remarksInflation can be controlled by aggressive interest rate increases, even though the economy may experience some pain. The agent will continue doing this until high prices fall.
He said, “We need now to act forthrightly, strong as we have been and we must keep at it until that job is done to prevent that.”
