Powell Will Get People ‘Fired Over the Next Year’

  • Fed Chair Jerome Powell testified before the Senate Banking Committee on Tuesday.
  • Sen. Elizabeth Warren asked him how he will respond to Americans that could lose their jobs from interest rate hikes. 
  • While inflation is easing, Powell has indicated continued rate hikes will be necessary this year.

Massachusetts Sen. Elizabeth Warren is once again drilling the leader of the nation’s central bank on continued interest rate hikes.

On Tuesday, Federal Reserve Chair Jerome Powell testified before the Senate Banking Committee on monetary policy actions and where inflation is headed as the US continues to recover from the pandemic. While the Fed slowed interest rate hikes in February by 25 basis points — a slowdown from the prior 50 basis point increase in December — Powell indicated that hikes will continue this year as inflation remains above the 2% pre-pandemic goal.

Warren has long criticized Powell’s aggressive tactics to fight inflation. She has previously argued that continuing to hike interest rates could cost Americans jobs and trigger a recession, and she honed in on that point during the Tuesday hearing.

“So Chair Powell, if you could speak directly to the 2 million hard working people who have decent jobs today, who you’re planning to get fired over the next year, what would you say to them?” Warren asked. “How would you explain your view that they need to lose their jobs?”

Powell responded that he would “explain to people more broadly that inflation is extremely high and it’s hurting the working people of this country badly. All of them, not just 2 million of them, but all of them are suffering under high inflation and we are taking the only measures we have to bring inflation down.”

“Will working people be better off if we just walk away from our jobs and inflation remains 5%-6%?” he added.

Powell has previously expressed optimism that prices will go down for Americans this year, but the process won’t be smooth.

“We expect 2023 to be a year of significant decline in inflation,” Powell said last month.

“This process is likely to take quite a bit of time,” he added. “It’s not going to be, we don’t think, smooth. It’s probably going to be bumpy.”

Still, Warren and other Democratic lawmakers want the Fed to ease off on getting inflation to 2% to avoid too much tightening that could cause a recession. Democratic Sen. John Hickenlooper, for example, sent a letter to Powell last month urging him to pause the hikes, saying that they “will only make it more expensive for small businesses to fund their operations. It will also put a drag on consumer spending, which accounts for two-thirds of the economy.”

The Fed is expected to raise interest rates again at its next Federal Open Market Committee (FOMC) meeting later this month, but Warren thinks enough is enough.

“Chair Powell, you are gambling with people’s lives,” Warren said on Tuesday.

“You claim to the idea that there’s only one solution: lay off millions of workers,” she added. “We need a Fed that will fight for families. And if you’re not going to lead that charge, we need someone at the Fed who will.”

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