A senior Democrat warned the Fed not to raise interest rates prematurely, which highlights the risk of a political rebound as the U.S. Central Bank begins to consider withdrawing monetary support.
The comment by Carolyn Maloney, a representative from New York and a senior member of the House Financial Services Committee, was in response to Last week’s economic forecast Fed officials pointed out that interest rates will be raised by two levels in 2023, earlier than the forecast three months ago.
“The Fed should be very cautious when putting the brakes on the economy,” Maloney told the Financial Times. “The main point I want to express is that we are coming out of an economic depression. Therefore, the last thing we need is for the Fed to tighten monetary policy too quickly to get us back into a recession.”
Maloney’s comments came before Federal Reserve Chairman Jay Powell testified before the Coronavirus Crisis Subcommittee selected by the House of Representatives on Tuesday afternoon. Maloney, who has represented the districts of New York City in the House of Representatives since 1993, is a member of this group.
The Democratic congressman said she was worried Recent rise in inflation Will “terrorize” the U.S. central bank to raise interest rates, adding that she is concerned that “traditional inflation statistics” are “unreliable” and reflect outdated spending patterns.
“We usually measure inflation by representing a package of goods and services that people usually buy. Right now… they don’t spend money in restaurants, they actually spend money on groceries.”
Although the Fed’s economic forecasts show that most of its policymakers now expect interest rates to rise in 2023 against the backdrop of a strong recovery, but The central bank has stated This will only be done when certain milestones have been reached.
These thresholds include full employment and the inflation rate reaching and “expecting” to exceed 2% for a period of time.Fed officials have repeatedly stated that these goals are still far away, even though they Start discussing slowdown The pace of monthly bond purchases of US$120 billion initiated at the beginning of the pandemic.
in Ready comments In the news released before Tuesday’s hearing, Powell did not discuss the Fed’s policy path, nor did he talk about last week’s economic forecasts. He pointed out that recent economic data has “continued” improvement, but said that the rise in inflation may be “temporary” and the labor market recovery is “imbalanced”. The mild language indicates that any austerity measures are still in the foreseeable future and will be treated with caution.
“The monetary policy pursued by the Federal Reserve aims to foster a strong and stable economy, thereby improving the economic outcomes of all Americans. Those who have been left behind are most likely to prosper in a strong economy with a large number of jobs,” Powell Say. “When everyone can contribute to prosperity and share the benefits of prosperity, our economy will become stronger and perform better.”
Maloney’s warning comes when US President Joe Biden and his economic team will decide in the next few months whether to reappoint Powell as the chairman of the Federal Reserve beginning early next year or to succeed him.Democrats are satisfied with Powell’s work, but A more hawkish policy May erode this support.
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