STATEMENT: Economist Michael Madowitz on the Federal Reserve’s Decision to Raise the Benchmark Interest Rate
Washington, D.C. — Michael Madowitz, economist at the Center for American Progress, released the following statement today after the Federal Reserve announced its decision to raise its benchmark interest rate a quarter-point:
The Fed clearly telegraphed today’s rate hike, so while its actions are no surprise, they are no less of a disappointment. In the Fed’s defense, the run-up in interest rates over the last year is exactly what everyone predicted would happen when the White House and congressional Republican leaders enacted a large, unpaid-for tax cut while rolling back regulations on big banks.
Overall, this is a disappointing day for those who believe the Fed should focus on making sure the economy produces strong outcomes for workers. Raising interest rates for the fourth time this year has made housing, cars, and other big-ticket items more expensive for everyday families. The Fed’s dual mandate calls for maximum employment and stable prices, and today’s actions push against the full employment mandate at a time when stable prices are hardly something to worry about from an inflationary perspective.
President Donald Trump is obviously nervous about the Fed’s actions and has resorted to publicly pressuring Fed Chairman Jerome Powell not to raise rates. But this is for self-serving reasons. He is concerned about movements in the stock market and other financial markets because he is concerned about the fortunes of the 1 percent. This may well backfire in the long run. Financial markets are unlikely to become less volatile if erratic, Trumpian policymaking takes up permanent residence in their neighborhood.
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