FOMC Is Wrong to Plan Rate Hikes for 2016
Even predicting rate hikes negatively affects jobs and wages for working families
03.16.2016
Today, the FOMC announced that it will not be raising interest rates this month, which is a good thing. But at the same time, via its dot plot, the committee showed consensus in favor of raising interest rates during 2016. Today’s projections threaten employment and salaries for working families, particular from Black and Latino communities, and will bring real harm if they come to pass. Last week, low-income people of color across the country took the unprecedented step of flyering outside their regional Fed banks before the regional presidents traveled to DC for the FOMC meeting, urging them to “Connect the Dots” and not predict rate hikes in 2016 on their dot plots.
Dushaw Hockett, executive director of SPACEs, a community-based organization in Washington, DC that is part of the Fed Up Coalition, released the following statement in response to the FOMC announcement:
“Over the past seven years, the Fed has repeatedly over-estimated the health of the economy and over-estimated the likelihood of rate hikes – and that has only served to make the recovery weaker.[1] This month’s dot plot prediction is more of the same: once again the Fed is ignoring the real signs of weakness in the economy, particularly for Black and Latino communities, who haven’t had a recovery at all.
“The Fed needs to connect the dots with reality: involuntary part-time work is still almost double pre-recession levels, labor force participation rates are still low, Black unemployment is more than double white unemployment and Latino unemployment and underemployment is still at crisis levels, and wage growth is almost non-existent. A dot plot that ignores these realities actually slows down the economy by tightening credit markets. Recent data shows that there is plenty of room for the economy to grow. Rather than slowing down progress, the Fed should do all it can to facilitate growth in 2016 and beyond.”
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The Center for Popular Democracy promotes equity, opportunity, and a dynamic democracy in partnership with innovative base-building organizations, organizing networks and alliances, and progressive unions across the country. CPD builds the strength and capacity of democratic organizations to envision and advance a pro-worker, pro-immigrant, racial justice agenda. www.whatrecovery.com Fed Up is a coalition of community organizations and labor unions across the country, campaigning for the Federal Reserve to adopt pro-worker policies for the rest of us. The Fed can keep interest rates low, give the economy a fair chance to recover, and prioritize full employment and rising wages.
Press Contact: Anita Jain, ajain@populardemocracy.org, 347-636-9761
[1] See Ylan Mui, The economy never seems to be as good as the Fed thinks it will be, Washington Post (Sept. 15, 2015) and Narayana Kocherlakota, Dovish Actions Require Dovish Talk (To Be Effective), Blog Post (Feb. 4, 2016).
