AFL-CIO President Liz Shuler on Wednesday criticized the Federal Reserve for issuing another interest rate hike, warning that the move will have a “direct and harmful impact” on working families.
The labor leader’s remarks come after Fed officials raised interest rates by three-quarters of a percentage point, the sixth rate hike since the Fed ramped up its efforts to slow the economy and tame inflation in March.
“The Fed seems determined to raise interest rates, though it openly admits those rates could ruin our current economy as unemployment remains low and people are able to find jobs,” Shuler said in a statement.
“The Fed’s actions will not address the underlying causes of inflation — the war in Ukraine, climate change’s effect on harvests and corporate profits, and an increase in the chances that the United States enters a recession.”
Labor unions and progressive groups have condemned the Fed’s approach to taming inflation, which is focused on slowing wage growth to bring down demand, and thus prices.
They argue that corporate greed is a primary driver behind persistent price hikes, pointing to data from the Bureau of Economic Analysis showing that U.S. corporate profits reached an all-time high in the second quarter of 2022.
The White House has taken a similar approach, this week threatening energy companies to increase production or face a new windfall tax. Six of the largest oil and gas firms together raked in nearly $60 billion in third-quarter profits, led by ExxonMobil’s $19.7 billion haul, as consumers faced higher energy costs.
“Working people should not be the target of lowering inflation — it should be corporations that are earning record profits,” Shuler said.
Even as supply chain issues improved and demand for products have dipped, inflation remains stubbornly high, with prices rising 8.2 percent over the last year ending in September, according to Labor Department data.
The Federal Open Market Committee said in a statement Wednesday that “ongoing increases” to interest rates may be needed to get annual inflation down to its 2 percent target.
The committee said that it will factor in “the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments.”