U.S. Fed's rate hikes equal inflation-unemployment tradeoff: The Hill

By Xia Lin
  • World
  • Saturday, 01 Oct 2022

NEW YORK, Sept. 30 (Xinhua) -- Federal Reserve Board Chair Jerome Powell last week increased the Fed fund rate by 75 basis points and promised additional increases by year's end to lower the present annual inflation rate of 8.3 percent, which could cost the economy 1.2 million jobs, reported The Hill on Wednesday.

"Powell's decision suggests he prefers trading the pain of 1.2 million lost jobs for a little lower inflation for all. This is a costly action that ignores a less painful option. It is also Powell's third error in the past few years," the report noted.

In 2019, Powell began to tighten the Fed rate prematurely, recognized his mistake and reversed course, according to the report.

In the spring of 2020, facing pandemic-induced economic collapse, he pumped trillions of dollars into the economy for far too long, held the Fed rate close to zero and, as a result, propelled the present high inflation.

And earlier this year, Powell waited too long to tighten, and is now overreacting by increasing rates too fast and promising to do so for the foreseeable future, said the report.

"Powell should be patient, recognize that some inflation is beyond his control and reexamine the 2.0 percent inflation target," it added.

Article type: free
User access status:
Subscribe now to our Premium Plan for an ad-free and unlimited reading experience!

Next In World

Analysis-Mexican president's electoral gambit breathes life into opposition
Disasters caused total of $122 billion in insured losses in 2022 - Swiss Re
U.N. tell Taliban to investigate reports of extrajudicial killings in Daikundi
Ukraine's Kherson loses power supply after Russian shelling - governor
Russia's Lavrov says European security body is hobbled by West
Five letter bombs detected in Spain, country steps up security
Islamic State leader Quraishi blew himself up after being surrounded -sources
Russia condemns German parliament for declaring Ukraine Soviet-era famine a genocide
South African president's future in balance after misconduct report
Modi urges unity on 'greatest challenges' as India assumes G20 presidency

Others Also Read