Federal Reserve Chairman Jerome Powell speaks during a news conference at the Federal Reserve Board building in Washington, Wednesday, July 27, 2022. (AP Photo/Manuel Balce Ceneta)
OAN Newsroom
UPDATED 1:27 PM PT – Wednesday, July 27, 2022
The Federal Reserve has imposed another big interest rate hike in an effort to tackle runaway inflation. Chairman Jerome Powell announced Wednesday, the Central Bank is raising rates by an additional three-quarters of a percentage point. This is the fourth rate hike in five months, further stoking fears of a recession.
Inflation hit 9.1 percent in June, which is the fastest increase in prices in 40 years. The second quarter GDP report will be released Thursday and is expected to show a contraction. Economists have pointed out a second negative quarter in a row would mean America is already in a recession.
Economists at Saxo Bank said the US will face higher inflation for an extended period of time because the White House and the Federal Reserve don’t have enough policy choices. In their new analysis, Saxo economists concluded rising federal interest rates will increase US unemployment while rising prices will continue to hurt consumers.
Experts believe energy prices will continue to rise due to political risks. Saxo analysts also said it’s unrealistic to expect inflation to peak in December because that’s when the energy crisis will become worse due to higher. Meanwhile, inflation is unlikely to “peak” anytime soon and it turns out it’s not “transitory” after all, which is contrary to White House claims.
According to the Bureau of Labor Statistics, food prices are up 10.4 percent and the pain at pump has become more severe as gas prices increased by nearly 60 percent over the last year. As prices surge, so are the lines at food banks across the country.
“What we’re hearing from people and families is they’re making these decisions between filling their gas tank to get to work, paying the rent, paying utilities, other basic expenses and meeting their food costs,” explained Michael Flood, CEO of the Los Angeles Regional Food Bank.
Food banks are struggling to meet growing demand as more working Americans grapple with inflation and struggle with feeding their families. Flood said people are looking to pantries and distribution programs just “to try to make ends meet.”
Vanessa Correa, left, and Gigi Fiske, right, pass out gallons of milk at a food distribution held by the Farm Share food bank, Wednesday, July 20, 2022, in Miami. Long lines are back at food banks around the U.S. as working Americans overwhelmed by inflation turn to handouts to help feed their families. (AP Photo/Lynne Sladky)
This comes as the Federal Reserve is set to inflict more pain on the economy with another big interest rate hike in an effort to tackle skyrocketing inflation. Chairman Jerome Powell insisted the Fed is “committed to bringing inflation back down.” He even suggested they are “moving expeditiously to do so.”
Chief Investment Officer Cresset Capital, Jack Ablin explained that the more persistent inflation is, the more aggressive the Federal Reserve has to be. This comes ahead of the release of the second quarter GDP report, which is expected to show a contraction. Economists have pointed out a second negative quarter in a row would mean America is already in a recession.
The Biden White House continues to avoid responsibility for the economic crisis facing the country. During a recent press conference, Economic Adviser Brian Deese suggested Americans shouldn’t complain about inflation… as they could be worse off like other countries facing famine. He went on to say that despite inflation hitting a record high in June, the economy is “resilient to the challenges” nation is facing.
“So it’s our view that inflation is the top economic priority that we need to be focused on as a country,” he stated. “And it is our view that if we move out more quickly and more aggressively on the types of steps that the President has outlined, then we are going to move more quickly to helping to bring prices down.”
Deese is not the first White House official to ignore or alter the definition of a recession while trying to downplay the severity of the pain Americans are feeling in their pocketbooks