With Latest Rate Hike, Progressive Critics Say Fed ‘Making a Big Mistake’

The U.S. Federal Reserve is on the verge of causing a disastrous surge in unemployment, progressives said Wednesday after the nation’s central bank raised interest rates for the second consecutive month—doubling down on its dogmatic quest to reduce prices even as slowing wage growth offers more evidence that inflation is being driven by corporate profiteering and supply chain issues rather than excess demand.

“Rate hikes will force millions of Americans into joblessness and make families poorer,” University of California, Berkeley public policy professor Robert Reich wrote on social media after the Fed once again increased its benchmark policy rate by 75 basis points. “It’s the last thing we need right now.”

“Every time over the last half-century the Fed has raised interest rates this much and this quickly, it has caused a recession,” Reich continued.

“With the Federal Reserve’s pace of monetary tightening now the fastest in decades, I have serious concerns that President [Joe] Biden’s promise to ‘grow the economy from the bottom up and the middle out’ is now at risk,” Jayapal said in a statement.

Jayapal noted that Fed Chair Jerome Powell has admitted that soaring energy and food prices “are in fact related to the pandemic, supply chain disruptions, and the war in Ukraine—that supply constraints, not excess demand, are responsible for persistent inflation.”

“At a time when the Biden administration has been working to reach full employment—creating nearly 9 million jobs and decreasing unemployment to among its lowest levels in 50 years—raising interest rates risks reversing that trend,” Jayapal continued, “and could force employers to lay off employees who just got back to work, or slow hiring altogether.”

According to a recent survey, a majority of U.S. voters are opposed to precipitating a recession to tame inflation.

Originally published at Commondreams.org.