Charles Krupa/Associated Press
- The Federal Reserve hiked interest rates again today, but not at the same fast pace as past months.
- Rate hikes are meant to ease inflation — and could increase unemployment and cause a recession.
- Senator Elizabeth Warren told HuffPost that Fed Chair Jay Powell is pushing to get more people fired.
The nation’s central bank might be easing off the gas pedal when it comes to fighting inflation — but that’s not enough for Massachusetts Sen. Elizabeth Warren.
On Wednesday, the Federal Reserve announced it would be increasing interest rates yet again, raising them 0.5 percentage points. This was a promising sign for consumers given that the past four consecutive hikes came in at 0.75 percentage points, and it followed promising data from the Consumer Price Index on Tuesday, which measured a decrease in inflation year-over-year in November to 7.1%.
But inflation is still undoubtedly high and far from the Fed’s goal of reaching the pre-pandemic level of 2% — and it has lawmakers like Warren concerned that continuing to hike rates will send the economy into a recession and trigger job losses.
“He’s pushing hard to get more people fired because he thinks that is one way to help bring down inflation,” Warren told HuffPost’s Arthur Delaney, referencing Federal Reserve Chair Jay Powell. But, Warren said, that’s “sure painful for the families who lose their jobs.”
It’s an argument that Democrats have continually deployed in their pushback to the blunt force tactic the Fed uses to bring down inflation. Interest rate hikes are the main tool that the Federal Reserve can employ to offset inflation, but they do risk tipping the country into inflation — and leaving more workers unemployed.
This isn’t the first time Warren has sounded the alarm on continued interest rate hikes. She previously joined other Democratic lawmakers in sending a letter to Powell urging him to consider the risk to Americans’ employment his tactics to fight inflation have brought, and during a speech last month, Warren said that “there is a big difference between landing a plane and crashing it.”
“Powell risks pushing our economy off a cliff,” she added. “And who will be most likely to lose their jobs? Not stock brokers and investment bankers. Nope. The people out of work will be low-wage workers and those already struggling most with rising prices.”
The Federal Reserve isn’t the only body that could take action: Congress could step in with legislation aimed at lowering prices. Warren, for instance, cosponsored legislation that would have taxed oil and gas company’s record profits, and sent the money back to Americans in checks. Sens. Bernie Sanders and Ed Markey have introduced legislation to impose a 95% tax on big corporations’ record pandemic profits.
Liz Shuler, the president of the AFL-CIO, the country’s largest labor federation, echoed Warren’s sentiments.
“Raising interest rates is NOT the only solution for our economic crisis,” Shuler wrote on Twitter. “You know who’s NOT feeling the cost of inflation this holiday season? Major corporations & their CEOs, whose profits have increased by more than *80%* in the last two years alone.”
Amid Warren’s concerns that the Fed could lead the economy into a recession, the overarching theme of Powell’s Wednesday remarks was uncertainty. He couldn’t say whether there will be a recession next year, and if there is one, how bad it will be, but he emphasized that until prices are significantly lower, continued interest rate increases will persist.
“I don’t think anyone knows whether we’re going to have a recession or not,” Powell said. “And if we do, whether it’s going to be a deep one or not, it’s just, it’s not knowable.”