US Senator John Hickenlooper of Colorado wrote a letter asking the Federal Reserve Board to suspend an interest rate hike on Thursday, fearing that recent increases could have negative consequences.
The Fed has raised interest rates five times since March in an attempt to control inflation, but Hickenlooper warned against raising rates again until the Fed can “fully understand the impact of previous increases “, according to a press release from Hickenlooper’s office. The statement said there is a lag between when the Fed makes a decision and the consequences it has on American workers, and Hickenlooper said that should encourage caution rather than haste.
“High inflation requires a response,” Hickenlooper wrote. “But the concern is that the Fed is doing too much, too fast.”
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In the letter to Fed Chairman Jerome Powell, Hickenlooper noted the severe repercussions of Russia’s invasion of Ukraine, as well as labor shortages and supply chain issues, on inflation, and the Fed “does not have the tools to address these causes”.
“The Fed’s most brutal tool is raising interest rates, and it has wielded that hammer repeatedly,” Hickenlooper wrote. “However, after five consecutive rate hikes by the Fed, I fear that any further action will undermine economic growth and hurt American families. To date, Fed actions have failed to stem inflationary pressures. on Americans.
Nonpartisan staff of the Colorado Legislature recently warned of an increased risk of recession and the impact on the state budget due to world events such as the war in Ukraine and policy decisions by the Fed.
Hickenlooper’s letter also noted that the Fed’s 3 percentage point interest rate hike since March is the fastest increase of that size since 1982, which he said is understandable given the severity of inflation, but the effects need to be watched ahead of another hike. He said the Fed’s decisions have only further increased the cost of living across the country, especially for communities of color and middle-class families.
“Mortgage rates have skyrocketed, borrowing costs for Main Street businesses have gone up, credit card payments have gone up as interest payments have gone up, car loans are getting more expensive,” wrote Hickenlooper. “The risk is that higher interest rates could lead us into a potential recession, hurting middle-class workers who haven’t seen wage gains in decades. Excessive overshoot by the Federal Reserve could crush increases wages and harm workers who are beyond reproach for inflation.
Congress has also taken steps this year to fight inflation, passing laws such as the Inflation Reduction Act to help lower health care and energy costs.