'Fed Chair Powell is ready to throw workers under the bus to save the 'economy.' But we are the economy.'
"Fed Chair Powell is ready to throw workers under the bus to save the 'economy,'" said one expert."But we are the economy."Federal Reserve Chair Jerome Powell said in a closely watched speech Friday that the U.S. central bank is ready to inflict"pain" on households as it continues to fight inflation, remarks that drew widespread backlash from experts who warned the Fed appears poised to spark a devastating recession and mass layoffs.
"While higher interest rates, slower growth, and softer labor market conditions will bring down inflation, they will also bring some pain to households and businesses," Powell continued. But the Fed chief argued that such pain would be worth it because"a failure to restore price stability would mean far greater pain."
Economist Robert Reich, the former U.S. labor secretary, responded bluntly to Powell's comments:"This is nuts."."But the Fed's aggressive effort to tame it through steep interest rate hikes—the fastest series of rate hikes since the early 1980s—is raising the risk of recession. If it raises rates again in September by another three-quarters of a point, which seems likely given Powell's remarks today, the risk becomes larger.
"The pain is already being felt across the land," Reich added."Most Americans aren't getting inflation-adjusted wage increases, which means they're becoming poorer."Powell's speech was seen by many observers as his most hawkish message yet as the central bank attempts to rein in inflation with a blunt tool that is unlikely to mitigate the causes of price surges in the U.S.
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