Commentary: Big Tent Ideas

SHEFFIELD: Powell Won’t Admit How America Got Into Such Dire Economic Straits In The First Place

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The Federal Reserve’s decision to raise target interest rates by 75 basis points for the third time this year following a Wednesday meeting of the Federal Open Market Committee all but ensures American families’ financial pain will continue and our current recession will likely drag on.

The Dow market closed 500 points lower after the sharp rate increase, which brings the Fed’s rate up to the range of 3%-3.25%, its highest since early 2008 — the year America fell into the Great Recession. After leaving rates close to zero for most of the COVID-19 pandemic and 2021 recovery, the Feds have raised them five times this year.

What’s strange is the Fed’s continued hikes, including today’s articulated by Chairman Jay Powell during a press conference, seem to be occurring in a vacuum devoid of any fiscal spending context. In his opening remarks before the press conference announcing the aggressive rate hike, Powell again made no mention of the fiscal mess due to out-of-control spending by the Democrat-controlled Congress and President Joe Biden that contributes to record inflation.

Powell — unlike his predecessors who waded into fiscal matters because they directly impact the Fed’s mission to preserve stable prices and strong employment — will not stand up to this Democratic fiscal madness. During a June congressional hearing, Powell refused to offer support for fiscal policies that will cut inflation, boost productivity and supply.

“We’re very focused on sticking to our knitting and carrying out the task that we’ve been assigned,” Powell said during the hearing. “I swore off getting involved in these fiscal debates … it’s really not our job … I don’t think it’s appropriate for the Fed or for me to be reaching out into areas of policy that are not assigned to us.”

Sticking to his knitting is part of why America suffered our 2022 recession. Powell and his Beltway colleagues were asleep at the wheel, myopic in refusing to acknowledge how profligate fiscal spending fueled today’s record inflation and how new plans like Democrats’ student loan gimmick will make things worse.

The Fed’s move today also ensures consumers will increase credit card use to make ends meet amid painful inflation. Further rate hikes by the Fed will likely cause credit card rates to continue to rise, a double blow to families just scraping by.

Home values are starting to plummet, and will likely accelerate the drop in family’s net worth, which already fell by $6.1 trillion during the second quarter of 2022 alone.

The FOMC released economic projections through 2025, and Barron’s reports that before the meeting today, markets expected rates to peak at 4.5% in March. Yet the FOMC projections suggest most Fed officials see rates rising above 4.5% next year, with some estimating as high as 4.9% — a painful prospect for the jobs and housing market.

The forecast released today shows the Fed doesn’t expect to cut rates until 2024 — just in time for the presidential elections. Funny how Powell wants to supposedly shy away from political debates yet his policies will wreak havoc and further nosedive the economy, just like the Democrats in the White House and Congress.

Carrie Sheffield is a senior policy analyst at Independent Women’s Voice.

The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller News Foundation.