[ad_1]
With the Fed’s latest rate hike, the “pain” that Chairman Powell has been warning about will take many forms, including job losses, which the central bank chief described as a “softening in the labor market.”
Critics, such as Senator Elizabeth Warren, have repeatedly called out the risk of increasing unemployment, which is currently at a historic low of around 3.7%. When interest rates rise, business activity slows down, leading to fewer hires and more layoffs. The Fed expects unemployment to reach 4.4% next year, which will result in the loss of more than 1.3 million jobs.
“Chairman Powell announces another big interest rate hike while predicting high unemployment.” Warren tweeted. “I’ve been warning that Chairman Powell’s administration will put millions of Americans out of work — and I’m afraid it’s already on its way to doing that.”
Powell said at the news conference that the short-term pain is preferable to the long-term pain of causing inflation to spread. Slow growth and high unemployment are painful for all the people we serve, but not as painful as the failure to restore price stability and come back and do it down the road.
“We need to put inflation behind us to set the labor market up for another strong period,” he added.
“I wish there was a painless way to do this. There isn’t.”
[ad_2]
Source link
