A group of Democratic legislators recently requested answers from the Federal Reserve Board on its plan to continue to raise interest rates at a rapid pace, even if it increases unemployment.
“You continue to double down on your commitment to ‘act aggressively’ with interest rate hikes and ‘keep at it until it’s done,’ even if ‘(n)o one knows whether this process will lead to a recession or if so, how significant that recession would be.’ These statements reflect an apparent disregard for the livelihoods of millions of working Americans, and we are deeply concerned that your interest rate hikes risk slowing the economy to a crawl while failing to slow rising prices that continue to harm families,” the lawmakers wrote to Fed Chair Jerome Powell.
The letter was signed by U.S. Sens. Elizabeth Warren (D-MA), Sheldon Whitehouse (D-RI), Jeff Merkley (D-OR), and Bernie Sanders (I-VT), along with U.S. Reps. Madeleine Dean (D-PA), Jesus “Chuy” Garcia (D-IL), Sylvia Garcia (D-TX), Katie Porter (D-CA), Stephen Lynch (D-MA), Rashida Tlaib (D-MI), and Jamaal Bowman (D-NY).
The Fed has raised interest rates by 3 percentage points since March and is expected to raise the federal funds rate by another 1.25 percentage points before the end of the year and by another 25 basis points in 2023. The Fed also projects that unemployment will rise sharply from 3.7 percent today to 4.4 percent in 2023 and 2024, which would result in an additional 1.2 million people losing their jobs, the lawmakers said.
The legislators added that a growing group of economists from across the political spectrum have raised concerns that the Fed’s rate hikes risk putting many people out of work. Thus, they have asked Powell to answer questions related to how additional rate hikes will impact employment.