Groundwork’s Rakeen Mabud: “Fed’s actions are heightening the risk of recession”

Groundwork’s Rakeen Mabud Ahead of FOMC: “Fed’s actions are heightening the risk of a painful recession”

Chair Powell and the Federal Reserve are expected to raise interest rates by 25 basis points at this week’s Federal Open Market Committee (FOMC) meeting. This would be the 10th straight rate hike in 14 months.

Groundwork Collaborative’s Chief Economist Rakeen Mabud released the following statement:

“Chair Powell and the Fed have made it clear that high interest rates are here to stay, even if it means trampling on one of the strongest labor markets in history. The Fed’s actions are heightening the risk of a painful recession and causing instability in financial markets. If the Fed insists on raising rates again this week, it is jeopardizing the progress we have made towards building a healthier and more inclusive economy for all.”

• A Groundwork poll found that a majority of voters want the Federal Reserve to stop raising interest rates before it triggers a recession and throws millions out of work. More than three-quarters of voters say policymakers should focus on the legislative tools Congress can use to fight the inflation we’re seeing today.
• The banking system is facing major turmoil from the Fed’s actions with the failures of Silicon Valley Bank, Signature Bank, and now First Republic Bank. Interest rate hikes are at least partially responsible for this instability. The Fed should not continue to erode confidence in the banking sector with an additional interest rate hike.
• The latest jobs report showed Black workers – and in particular, Black women – reached the lowest unemployment rate on record. Higher interest rates threaten to reverse this historic progress.
• Instead of grinding the economy to a halt, throwing millions out of work, and relying on bringing prices down by making people too poor to buy anything, Congress and the Biden Administration should take action. Lawmakers should crack down on corporate profiteering, protect consumers, and invest in our supply chains to make them resilient and reliable for the future.
• Workers and families already struggling with high prices should not have to shoulder the additional burden of unemployment. This is cruel and ineffective and works against our shared goal of building an economy that works for all of us.