Top Senate Democrat warns the Fed against causing mass job losses
Democratic Sen. Tim Kaine warned Thursday that the Federal Reserve could unintentionally cause mass job losses, by raising interest rates too quickly.
“The Federal Reserve should not be giving themselves a blank check to do whatever they want to do,” Kaine, D-Va., wrote in an opinion column.
Kaine and two other Senate Democrats are pressing the Fed to slow its rate hikes, but Kaine also warned against causing mass layoffs.
“The Federal Reserve should be more cautious,” he wrote. “If the Fed is going to raise rates, they should look for ways to do it while not causing a severe economic disruption that makes it very difficult, if not impossible, to stabilize inflation and keep the economy healthy.”
Kaine made his comments after the Fed announced Wednesday that it was raising the federal funds rate by a quarter of a percentage point.
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The Fed also said it was keeping rates on its 2.75 percent benchmark rate benchmark at 0 to 0.25 percent, a level that it considers “neutral.”
Kaine urged the Fed to give itself more leeway to determine when and how high rates should be set.
“The Federal Open Market Committee deserves to have the freedom to use any method with any data,” Kaine wrote. “And more than that, the Federal Reserve deserves the freedom to give itself more leeway to determine when and how high rates should be raised or lowered.”
On Wednesday, Chairman Jerome Powell, who has been a driving force on rate hikes, said the Fed should raise rates as many times as necessary to stay on an even keel.
Powell said at an event hosted by the National Bureau of Asian Research that the Fed won’t be going out of its way to avoid raising rates more than once a year because of the consequences for both the economy and inflation.
He also warned that the Fed could accidentally slow economic growth.
“We’re not in the business of running up an economic growth curve,” he said. “We’re in the business