US Senator John Hickenlooper called on the Federal Reserve to suspend interest rate hikes on Thursday in a severe letter to Fed Chairman Jerome Powell.
The central bank has raised interest rates five times this year in an effort to combat soaring inflation by slowing the economy and easing price pressures, The Washington Post reported. It has sent benchmark lending rates up 3 percentage points since March – the fastest increase of this size since 1982.
“The risk is that higher interest rates will lead us into a potential recession, hurting middle-class workers who haven’t seen wage gains in decades,” the Colorado Democrat’s letter read. . “Excessive Federal Reserve overreach could crush wage increases and hurt workers who are blameless for inflation.”
Hickenlooper’s letter comes as Powell is expected to announce another interest rate hike next week, in addition to new projections of the likely economic effect.
In the letter, Hickenlooper asks Powell to wait six months to a year before raising rates again, pointing to research showing it can take that long for the full impact of interest rate changes to take effect. .
Hickenlooper called the Fed’s actions “understandable” given the current state of inflation, but attributed the cause of inflation to factors beyond the central bank’s control, such as continued inflation. Russian aggression in Ukraine, supply chain issues and labor shortages. By rapidly and repeatedly raising interest rates, Hickenlooper blamed the Fed for failing to stem inflation while hurting the economy.
“The Fed has been aggressive,” the letter read. “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. ”
Hickenlooper is the latest of a handful of Democrats to speak out against the Fed’s methods, including U.S. Senator Elizabeth Warren of Massachusetts and U.S. Senator Sherrod Brown of Ohio.
For the most part, however, Democrats and Republicans have backed Powell’s risky efforts to rein in inflation despite the lack of progress so far, with Politico calling the lack of pushback an “extraordinary spectacle of bipartisan support.”