Fed Boss Jerome Powell Faces Political Pressure amid Rate Hike Fears

WISCONSIN (CoinChapter.com) — United States Senator Sherrod Brown (D-Ohio) sent Federal Reserve Chairman Jerome Powell an unease about interest rate hikes. Mr. Brown said that due to so many rate hikes, national employment losses are on the horizon.

Mr. Brown is quoted as saying:

“It is your job to combat inflation, but at the same time, you must not lose sight of your responsibility to ensure that we have full employment […] Potential job losses brought about by monetary over-tightening will only worsen these matters for the working class”

As of now, employment is fine, but as time goes on, economic growth may decline; there are also risks of layoffs becoming elevated.

FOMC Meeting Expected To Bring Another 75 bps Rate Increase

Bown sent The letter ahead of Wednesday’s Federal Open Market Committee (FOMC) meeting. There is an overwhelming expectation that the Fed will raise interest rates another 75 basis points, pushing the US Central Bank benchmark rate between 3.75% to 4%. After Wednesday, the benchmark will be at its highest since 2008 – the fastest tightening since the early 1980s.

Political pressure is not unfamiliar to Mr. Powell as he was belittled by former President Donald Trump for raising rates.

Trump once said the central bankers are “boneheads,” going so far as to suggest Mr. Powell was as big an enemy to the US as China. However, the Fed Chairman seems to do well with criticism, staying on a path he believes is best to restore the economy to full strength.

Mr. Powell was asked for his comments on the Senator’s letter. A Federal Reserve spokesman said if any replies are made, it will be direct communication with Mr. Brown; it is not policy to go through the media first.

Employment Data and Powell’s Recession Love

The employment release will tell. Markets have priced in a 75 bps hike. What’s more critical is forward guidance. Employment has been strong, but with increased rates comes natural economic deceleration.

Following the FOMC interest rate release, if the Fed makes any remarks about a change in policy with a future wait-and-see approach, then it is likely the US dollar will lose some strength in the currency markets; that, in turn, should appease Senator Brown as it will reduce inflationary pressures.

Mr. Powell knows rising interest rates hurt the financial pockets of American families, but he frequently warns that letting inflation grow will worsen.