Staff Reports
The Federal Reserve’s decision to pause its interest rate increases will not be enough to prevent an incoming recession. The Fed’s unaccountable elites are too busy chasing imaginary inflation that they cannot see the impending damage they are causing. Despite inflation slowing to almost zero, Fed Chair Jerome Powell believes it will come back with a vengeance. As a result, the Fed is expected to resume its interest rate hikes next month, which could be disastrous for the economy.
Fed’s Rate Hike Pause Unlikely to Avert Recession https://t.co/5SHp0wboTt
— RedState (@RedState) June 22, 2023
The Fed seems insistent on raising interest rates, with 12 out of 18 officials predicting at least two more rate hikes this year. The target rate is already the highest it has been in 22 years, and the Fed expects to maintain these high rates for another two years. However, the producer price index numbers reveal that inflation has already been negatively impacted by the rate hikes. The economy is now showing signs of weakness, with manufacturing slowing down, unemployment claims rising, and the number of states with worsening unemployment increasing. Furthermore, the retail sales data indicates that consumer spending will intensify as it gets tougher for people to obtain credit due to higher interest rates.
The Fed claims to be aiming for a “soft landing” from inflation, but the economic indicators suggest that it has failed to avert a downturn, and may even be responsible for creating it. The Fed should cut interest rates now in an effort to get ahead of the soon-to-be-recessionary period to reduce the amount of economic damage. Still, the Fed seems intent on keeping interest rates too high for too long, even if it results in a recession and reduced production of goods and services.
