If you thought the Federal Reserve was nearing the end of its period of interest rate hikes in an attempt to get President Joe Biden’s inflation under control, think again.
According to Yahoo Finance, the Fed admitted that there’s still more pain to come.
To force excess demand out of the economy to tackle sky-high inflation, the Fed said this week that it’ll have to stick to its plan in raising and holding interest rates far above normal for some time.
The news comes as hard-working American households struggle with day-to-day expenses like groceries and gas.
“Hold our resolve”
“We are just going to have to hold our resolve,” Raphael Bostic, president of the Atlanta Fed, told the Atlanta Rotary Club this week.
According to Fed officials, US interest rates are not expected to be cut this year.
— EvanLuthra.eth (@EvanLuthra) January 5, 2023
Yahoo Finance added: “He later told reporters that the case for reducing the size of the Fed’s rate hikes to 25 basis points would be boosted if data due Thursday showed consumer prices cooling, following evidence that wage gains have also slowed.”
“Doing it in more gradual steps does give you the ability to respond to incoming information,” said San Francisco Fed President Mary Daly.
Daily was referring to the 50-point basis hikes, or maybe even 25-point hikes until the Fed feels it has a grip on the situation. For much of the latter half of last year, the Fed was hiking 75 basis points at a time, an unprecedented number.
It was noted that Daly and Bostic do not have a vote on policy this year, which is probably why they’re going on record.
Of course, the Fed takes its fair share of backlash for its decisions, too. Many across social media slammed the Federal Reserve for its actions so far, especially under President Biden.
The Fed in 2023:
1. Wants to see unemployment higher
2. Raising interest rates into a recession
3. Using a recession to lower inflation due to policy failure
4. Drives the majority of price action in markets
These are all the exact opposite reasons that the Fed was formed.
— The Kobeissi Letter (@KobeissiLetter) January 10, 2023
“The Fed stopped doing its job a long time ago. Monetary policy is the sound of a printer bbbrrrrrr. The printer fixes everything in the Fed’s eyes. Sounds like our Political system. Hmm,” another Twitter user wrote.
Either way, it looks as though the U.S. economy will continue to slam the bank accounts of lower and middle-class America, and that can’t end well.