The Fed’s decision to raise interest rates in the fight against inflation was criticized. While emphasizing that price stability should be ensured instead of increasing interest rates, it was said, “We need more from the Fed.”
The USA and Europe are trying to rein in inflation with interest rate hikes.
Despite the radical decision by central banks in the US and the continent, some economists have warned that raising interest rates will negatively affect low-income people.
“Inflation is painful, but…”
published in the Guardian newspaper “Inflation is painful. But raising interest rates makes the situation worse” In the opinion article titled, the table was examined.
Price stabilization measures instead of interest rate hikes
It was pointed out that interest rate increases could cause economic recession and harm ordinary people. In the article by Isabella Weber and Mark Paul, “We need price stabilization measures instead.” it was said.
It was stated that American politicians were faced with a “hard” election, and the following opinion was shared:
“Surgical approach that restrains price increases” proposal
“Either they can combat inflation by continuing to raise interest rates to create unemployment and lower demand. Or they can use a surgical approach to tackle chronic supply chain problems, while stimulating investment, while reining in inflation-triggering price increases.”
The current inflation situation is not about all products becoming more expensive at the same rate; It was pointed out that certain items such as food, fuel, cars and housing experienced large price shocks and increased inflation significantly.
Recession risk warning
Controlling these changes would require aggregate demand for Americans to fall to unbearable levels, which would mean “making poor people too poor to buy goods and thereby easing bottlenecks,” he said.
In the article, “Interest rate hikes are not only unsuitable to drive these underlying prices down, they also risk a recession that leaves millions of people unemployed.” expression was used.
‘We need more from the Fed’
On the other hand, it was emphasized that the burden of the coronavirus epidemic and inflation, borne by low-income households, and reliance on interest rate hikes, will once again shift this burden to the shoulders of the said segment.
“We need more from the Fed to combat inflation and respond to price shocks.”
