The Federal Reserve is doubling down on inflation-fighting interest rate hikes, despite its track record of destabilizing the financial system with such tactics that caused bank assets to lose more than $600 billion in value while the factors driving rising prices are not influenced by the higher cost of credit.
The Federal Reserve announced that it would raise interest rates by another quarter-point, maintaining its focus on reducing inflation despite recent uncertainty in the banking sector.
Lisa McCormick, an outspoken progressive Democrat, charged that the additional rate change – the ninth rate increase in about a year – is a gigantic blunder that shows the central bank is not in touch with reality.
“This shows a callous disregard for the working people who have gone longer than ever without an increase in the federal minimum wage and it underscores my resolve to replace President Joe Biden in the 2024 election,” said McCormick, who abandoned her support for Biden’s re-election when he met with the Saudi crown prince who ordered the murder of a Washington Post journalist.
McCormick delivered stinging criticism to the Federal Reserve for missing what should have been viewed as clear signs that Silicon Valley Bank was in peril of collapsing before the second-largest bank failure in U.S. history.
McCormick said the rate hike will increase unemployment and make spending more difficult for working-class Americans, while doing nothing to temper corporate greed or improve supply chains interrupted by the coronavirus emergency.
“It is the wrong cure for ailments we face and it is going to destroy Democratic hopes for holding a majority in the House and make Biden almost impossible to re-elect,” said McCormick, who said government intervention should be used to avert a crisis but these Biden administration blunders are causing them, as witnessed with a string of recent bank failures.
“Interest rates are at their highest level since 2007, which occurred right before the global financial crisis that brought on the Great Recession,” said McCormick.
“It’s inexplicable how the Federal Reserve supervisors could not see this clear threat to the safety and soundness of banks and to financial stability,” said Dennis Kelleher, chief executive of Better Markets, an advocacy group.