“ Our most vulnerable workers and families cannot afford to wait for you to realize the harm that you are doing.“

Video (YouTube)

WASHINGTON – Today at a House Financial Services Committee hearing, Congresswoman Ayanna Pressley (MA-07) critiqued the Federal Reserve’s interest rate hikes and urged Fed Chairman Jerome Powell to pause rate increases and consider the harm to vulnerable, low-income, Black and brown workers. Citing the Fed’s own unemployment projections, Rep. Pressley warned that further interest rate hikes will likely cause a recession and millions of job losses.

A full transcript of her exchange with Chairman Powell is available below and full video is available here.

Transcript: Pressley Critiques Fed’s Interest Hikes, Calls for Pause to Avoid Recession, Job Losses
March 8, 2023

REP. PRESSLEY: Thank you, Chairman Powell for joining us today and for your testimony. I’m going to focus my comments and my questions on the high costs that families in my district are seeing because of your interest rate hikes.

Now, while the Fed has acknowledged that higher interest rates are not the primary driver for the slowdown in price increases, you continue to raise interest rates, risky not only millions of jobs, but also a recession.

Based on projections from the Fed, approximately 2 million people will lose their jobs. So that’s 2 million families who will struggle to put food on the table keep a roof over their heads and to make ends meet. But the economic hardship does not end there.

Mr. Chair, I would like to request unanimous consent to submit a recent paper by the Federal Reserve Bank of Cleveland, titled “Post COVID Inflation Dynamics” into the record.

FSC CHAIR MCHENRY: Without objection.

REP. PRESSLEY: Chairman Powell, are you familiar with this publication? Yes, or no?

CHAIRMAN POWELL: No, I’m not.

REP. PRESSLEY: Okay. Well, let me give you some context. In this paper, the Fed’s own economist predict that reaching the 2% inflation goal that you have set will be impossible without causing a recession and spiking the unemployment rate to 7.4%.

Which translates to millions of working people losing their jobs.

Chairman Powell, many economists agree with me when I say that engineering a recession to bring inflation under control is not the right strategy, especially at a time when we’re seeing inflation cool, in real time, independent of your rate hikes.

So, on behalf of the people of this country, to prevent a recession, yes or no Chairman Powell, will you pause future interest rate hikes?

CHAIRMAN POWELL: We’re not seeking to have a recession and we don’t think we need to have a recession to get—

REP. PRESSLEY: Respectfully, will you pause interest rate hikes? Yes, or no?

CHAIRMAN POWELL: I don’t do yes or no on “will I pause interest rate hikes.” That’s a serious question. I can’t tell you because I don’t know all the facts. But you know, that’s not a—

REP. PRESSLEY: Reclaiming my time. And in fact, it is a very serious question because it has very serious implications. The people who will bear the brunt of an economic recession are our most vulnerable.

We know from past experiences that recessions have catastrophic and deeply inequitable consequences. In fact, while some will catch a cold, others will catch pneumonia. But you know that. An economic cold or pneumonia.

In fact, in your opening statement, you said, “we will stay the course until the job is done.” To conclude, we understand that our actions affect communities, families, and businesses across the country.

Could you elaborate? What is this effect to communities, families, and businesses, these interest rate hikes?

CHAIRMAN POWELL: Well, right now we’re trying to bring down inflation on behalf of all those families. I think high inflation is hurting, particularly working families, all around the country very badly.

And as you know, if you’re on a very limited budget, and you don’t have a lot of excess earnings, when prices start going up, you’re in trouble right away. Middle and upper-middle class people have more resources.

So, we think it’s absolutely critical for the working people of this country that we get inflation back under control. And also, while we’re at it, we have a dual mandate—

REP. PRESSLEY: Apologies, Mr. Chair. Reclaiming my time.

Here’s the thing: the most devastating impacts will be to our most vulnerable. Veterans – to our most vulnerable – veterans, the elderly, low-income workers, Black and brown workers, those who have often ignored and been neglected in the name of what you refer to as appropriate monetary policy.

And yet, you assert that you will stay the course. It’s unconscionable and our most vulnerable workers and families cannot afford to wait for you to realize the harm that you were doing.

In my opinion, this sounds more like the assertions of a greedy corporation than someone who has a public mission on behalf of the people of this country.

So, one more question with my remaining time here. Chairman Powell, another consequence of your interest rate hikes has been the increase of the average 30-year fixed mortgage rate to 6.6%, double of what it was two years ago.

Do you see this widening and equity in the housing market as a problem? And what steps will you take to make housing more affordable. This is putting a homeownership further and further out of reach, for my constituents, new parents, parents, millennials, people of color, contributing to inequities and the racial wealth gap. So what are your thoughts on that?

CHAIRMAN POWELL: Well, our policies—

FSC CHAIR MCHENRY: The gentlelady’s time has expired. Chairs can submit for the record or answer.

CHAIRMAN POWELL: I’ll briefly say that, if I can, that, you know, interest rate policies affect interest-sensitive spending very directly when we cut rates. They help housing when they raised rates. You see the effect on housing.

REP. PRESSLEY: Thank you.

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