In a desperate attempt to stop the soaring inflation under Joe Biden, the Federal Reserve announced it has raised an important interest rate for the second time in two months.
However, critics say that this move may be too late and could result in sending the economy into a tailspin during an election year as Democrats are desperately trying to retain a congressional majority.
The move to raise the benchmark interest rate by one-half of a percentage point is the largest hike in twenty years and shows how concerned the central bank is about out-of-control inflation.
It is the same strategy that the central bank used in the 1970s to combat high inflation. The then-Federal Reserve Chairman Paul Volcker raised interest rates to more than 17%, sending the economy into a recession during the 1980 election year. The recession helped contribute to President Jimmy Carter’s loss to Ronald Reagan and Republicans picking up twelve Senate seats.
Federal Reserve Chairman Jay Powell said at a press conference that officials have empathy for the pain that high inflation is causing Americans. The goal is to get inflation under control and ease the financial stress that households are facing as interest rates hit 8.5% last year.
The announcement is the second of six interest rate hikes that the Federal Reserve plans to do this year.
Conservative critics such as Alfredo Ortiz, president of the conservative business advocacy group Job Creators Network, said the rate hike will hurt business and could be too late to completely stop rising inflation without sending the country into a recession.
“Rising interest rates will help tame historic inflation. Yet higher borrowing costs also hurt consumers, entrepreneurs and the overall economy,” Mr. Ortiz said.
The rate hikes are already late given that inflation hit a 40-year high last month, according to the Washington Times, and is showing no signs of slowing.
Gasoline prices alone have jumped 48% over the past year. Meanwhile, food prices increased by 8% and housing costs rose 5%. You can read more here on the Next News Network.
Do you think that the Federal Reserve can control the soaring inflation Joe Biden and the Democrats have caused?