ICYMI: Recent Reporting Shines Light on Fed’s Failure to Address Inflation

October 25, 2022 Groundwork Collaborative

The Federal Reserve has raised interest rates five times this year – with an additional rate hike expected to come next week. Yet a growing number of economists and Fed experts are warning that the central bank is moving too aggressively – and is the wrong tool to fix supply chain issues, like the lack of affordable housing or chips for new cars. 

Below is a sampling of strong reporting on the Fed and inflation:

  • The Guardian: Latest US inflation data raises questions about Fed’s interest rate hikes. The Fed is restricted to monetary policy and can’t directly do anything about corporate pricing or supply chains, though Powell “could be more vocal” in public about the need for a holistic approach, Owens said. If the US and other central banks go at it alone, then consequences will likely be dire and reach around the world, she added. [10/16/22]
  • CNN: The Fed is losing the war against inflation. “Supply chain bottlenecks, a volatile global energy market, and rampant corporate profiteering can’t be solved by additional rate hikes,” said Rakeen Mabud, chief economist of the left-leaning Groundwork Collaborative policy group. “It’s time for Chair Powell and the Fed to step aside and for Congress to step in.” [10/13/22]
  • Washington Post: As the Fed fights inflation, worries rise that it’s overcorrecting. “This idea that we take on global supply shocks with domestic interest rate policy is probably not going to age well,” said Lindsay Owens, executive director of the Groundwork Collaborative, a progressive group focusing on economic policy. Owens compared the risks tied to the Fed’s approach to a frog that sits in a pot of gradually boiling water: “You don’t know you’re cooked until it’s over,” she said. [10/11/22]
  • Wall Street Journal: Midterm Report Card on Biden Economy Clouded by OPEC, Fed Moves. Lindsay Owens, executive director at left-leaning think tank Groundwork Collaborative, said the Biden administration had implemented policies that contributed to labor-market and economic strength as the pandemic waned, but that the Fed’s actions were now working against some of what Mr. Biden is trying to accomplish. “Now he sort of sits on his hands and waits to see how far Powell oversteps or if he can actually miraculously pull off something resembling the soft landing,” Ms. Owens said. [10/9/22]
  • Marketplace: As the Fed cranks up interest rates, critics ring warning bells. “I think [Fed Chair Jerome] Powell’s interest rate bender has us on the precipice of global recession,” said Lindsay Owens, a former Warren adviser and the executive director of the Groundwork Collaborative, a progressive policy organization. “He is really going hard on rate hikes. And the consequences could be tremendous for so many.” [10/5/22]

Email press@groundworkcollaborative.org to speak with Groundwork experts on the risks of aggressive interest rate hikes and their effects on workers.