Former Labor Secretary Robert Reich has reiterated his criticism of the idea of raising interest rates saying the central bank’s inflation-fighting measures are hurting lower-wage workers.
“Relying on the Fed to raise interest rates puts the burden of fighting inflation mostly on lower-wage workers who are already hurting from rising prices. There’s no need to continue punishing workers by increasing rates to drive unemployment. Stop raising rates,” Reich tweeted.
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Reich’s observation comes in the wake of Federal Reserve Chair Jerome Powell’s speech at The Economic Club of Washington, D.C. where he acknowledged once again that the disinflationary process has begun but also stated that the central bank would have to raise rates more than what is priced-in if the labor market remains strong and inflation remains high.
U.S. equity markets witnessed a see-saw movement on Tuesday as investors and traders held on to every word spoken by the Fed Chair. Major indices, however, ended the session in green. The SPDR S&P 500 ETF Trust SPY gained 1.29% while the Invesco QQQ Trust Series 1 QQQ rose 2.07%.
Powell’s comments come in the wake of a strong jobs report released last week. The Labor Department reported the U.S. economy added 517,000 jobs in January, far exceeding economist estimates of 187,000 new jobs.
Minneapolis Fed President Neel Kashkari said the Fed hasn’t made enough progress and that the target rate may need to rise as high as 5.4% from the current target range of 4.5% to 4.75% to beat inflation.
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