Lest anyone wonder if unelected government officials can wield enormous power over our lives, Federal Reserve Chairman Jerome Powell leaves no doubt as he declares his dedication to what he believes to be the mission of the Fed.
“Our responsibility to ensure price stability is unconditional”, Powell said last month.
To achieve such a goal, the Fed implemented on Wednesday what he said no doubt “bring pain.”
Stepping up its fight against high inflation, the Federal Reserve raised its benchmark rate by a substantial three-quarters of a point for a third consecutive time on Wednesday and announced further rate hikes to come. This is an aggressive pace that will increase the risk of a possible recession.
The Fed’s decision raised its benchmark short-term rate, which affects many consumer and business loans, to a range of 3% to 3.25%, the highest level since early 2008.
Officials also forecast that they will raise their benchmark rate further to around 4.4% by the end of the year, a percentage point higher than they had forecast last June.
This makes many consumer and business loans more expensive than they were since before the 2008 financial crisis.
Federal Reserve officials want to stop inflation by slowing growth, causing job losses, cutting borrowingâ¦they want a recession. They tried to disguise their goal by working towards a “soft landing,” but most experts agree that won’t happen.
Inflation is at a sickening 8.3%; and anyone who has tried to buy the essentials lately knows that the prices of food and fuel are skyrocketing to the point of being within reach of many of us. But higher wages also contribute to inflation; as is the increase in expenses.
Many in our area will wonder who receives these higher salaries and how does anyone have the money to spend more. This is where the problem lies. Here in our valley, we already tend to be late. When everyone talks about economic recovery, we are the first to be hit hard when officials engineer a downturn. And, in this case, the Fed thinks it can stop inflation by doing more than just pumping the brakes.
“It’s going to end up being a hard landing” said Kathy Bostjancic, an economist at Oxford Economics.
If so, it seems like Ohioans better buckle up.