Economy

Senate Banking Chief Calls for Fed to Focus on Jobs, as Rate Hike is Almost Aiming By Bloomberg


&copy Bloomberg. Senator Sherrod Brown, a Democrat of Ohio, shakes hands during a Senate Banking Committee confirmation hearing, Washington, D.C., U.S. on Tuesday, November 28, 2017. Powell expressed broad support for the Fed’s operation, regulation, and guidance of the economy, and offered a full-throated defense to the government institution he is about to lead.

(Bloomberg). Sherrod Brown from Ohio is the US senator who oversees the Federal Reserve as head the Senate Banking Committee. On Tuesday, he wrote to Fed Chair Jerome Powell asking him not to lose sight of employment as the central banking fights inflation.

“We must avoid having our short-term advances and strong labor market overwhelmed by the consequences of aggressive monetary actions to decrease inflation, especially when the Fed’s actions do not address its main drivers,” Brown, a Democrat, wrote in the letter.

This abrupt move will increase political winds around Fed. A week earlier, US central bankers were expected to continue their aggressive run at interest-rate rises to curb inflation. They also plan to cool the economy and the hot labor market. It also comes before the midterm congressional elections on Nov. 8, where Democrats are struggling to maintain at least partial control.

“For working Americans who already feel the crush of inflation, job losses will make it much worse. We can’t risk the livelihoods of millions of Americans who can’t afford it,” Brown wrote. “I ask that you don’t forget your responsibility to promote maximum employment and that the decisions you make at the next FOMC meeting reflect your commitment to the dual mandate.”

The Fed’s policy-setting Federal Open Market Committee meets next week to discuss policy and is widely expected to raise its benchmark interest rate by three-quarters of a percentage point for the fourth time in a row. The benchmark has been raised by 3 percentage points this year already, marking the fastest pace at which inflation has fallen since 1980.

After their Sept. 21 policy meeting, Fed officials published updated quarterly projections indicating that they believe it would be appropriate for them to tighten enough to bring the unemployment rate down to 4.4% by next year. In September, unemployment was 3.5%. According to the plan, it would result in about 1.5 million job loss, and no change in the size or composition of the labor force.

©2022 Bloomberg L.P.

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