The Fed's rate hikes will hurt. That's unavoidable. - Insurance News | InsuranceNewsNet

InsuranceNewsNet — Your Industry. One Source.™

Sign in
  • Subscribe
  • About
  • Advertise
  • Contact
Home Now reading Newswires
Topics
    • Advisor News
    • Annuity Index
    • Annuity News
    • Companies
    • Earnings
    • Fiduciary
    • From the Field: Expert Insights
    • Health/Employee Benefits
    • Insurance & Financial Fraud
    • INN Magazine
    • Insiders Only
    • Life Insurance News
    • Newswires
    • Property and Casualty
    • Regulation News
    • Sponsored Articles
    • Washington Wire
    • Videos
    • ———
    • About
    • Meet our Editorial Staff
    • Advertise
    • Contact
    • Newsletters
  • Exclusives
  • NewsWires
  • Magazine
  • Newsletters
Sign in or register to be an INNsider.
  • AdvisorNews
  • Annuity News
  • Companies
  • Earnings
  • Fiduciary
  • Health/Employee Benefits
  • Insurance & Financial Fraud
  • INN Exclusives
  • INN Magazine
  • Insurtech
  • Life Insurance News
  • Newswires
  • Property and Casualty
  • Regulation News
  • Sponsored Articles
  • Video
  • Washington Wire
  • Life Insurance
  • Annuities
  • Advisor
  • Health/Benefits
  • Property & Casualty
  • Insurtech
  • About
  • Advertise
  • Contact
  • Editorial Staff

Get Social

  • Facebook
  • X
  • LinkedIn
Advisor News
Newswires RSS Get our newsletter
Order Prints
September 23, 2022 Newswires
Share
Share
Post
Email

The Fed’s rate hikes will hurt. That’s unavoidable.

Bennington Banner (VT)
ANOTHER VIEW

The Federal Reserve raised interest rates Wednesday by 0.75 percentage points, the fifth rate hike this year in the central bank's crusade to tame inflation. Fed Chair Jerome H. Powell said more increases are likely - and they will hurt, slowing growth and weakening the labor market. Unfortunately, there is no other good option.

Inflation must be stopped. Mr. Powell stressed that Americans are already suffering from rising prices, and low-income people have been hit the hardest. Higher prices for basics such as food are eating up the wage growth people are seeing.

The problem will only accelerate, and become harder to fix, if the nation's leaders fail to tackle it now. "I wish there were a painless way to do that," Mr. Powell said.

"There isn't."

The Fed offered a road map. Accompanying substantial rate hikes, the central bank now projects that the economy will grow a mere 0.2 percent this year and expand at a still-weak 1.2 percent rate next year.

Unemployment will rise from 3.8 percent this year to 4.4 percent in 2023. Mr.

Powell warned that it is possible the United States could slip into a recession. Yet the Fed also projects that inflation will fall substantially, setting up the country for long periods of sustainable growth in the future, according to Mr. Powell.

Mr. Powell, as did many others, failed to anticipate the inflationary surge. Yet he is encountering increasing opposition in his fight to redress that error, and the debate will become only fiercer as higher interest rates are felt. Many have already retreated into familiar ideological camps.

Prominent progressives have attacked Mr. Powell's war on inflation, arguing that subsidizing U.S. manufacturing and creating new social programs would bring down prices. Some conservatives insist that the solution is lower taxes and less regulation, the same prescription they offer for any problem. These proposals obscure the essential point: As long as demand outpaces the economy's capacity to supply goods and services, prices will rise.

There are only so many ways to increase supply in the short run, and supply chain improvements or an end to the destabilizing Ukraine war are not guaranteed. Therefore, the Fed must restrain demand by making it more expensive for companies and individuals to borrow and invest.

This is a bloodless way of saying that the job market, wages and economic growth - and many of the people who depend on them - must suffer to avoid even worse economic conditions.

Harvard economist Lawrence H. Summers warns that, in the 1970s, observers engaged in much the same thinking that many Fed critics do today in an effort to avoid such pain. The result was ruinous stagflation, which punished low-end workers the hardest and required a deep recession to finally crush.

Inflation is not as bad as it was at its 1970s peak. There is hope that the Fed will manage to restrain inflation without tipping the economy into recession, achieving a so-called soft landing.

This would require deft timing on the size and pace of interest rate hikes, which in turn would require Fed officials to successfully predict the future. Doing so is particularly hard because interest rate hikes take time to translate into lower inflation numbers.

But the Fed must avoid wishful thinking, even as more people in Washington howl. Mr. Powell is doing just that, and he deserves Americans' forbearance.

- The Washington Post

Older

US economic barometer drops for sixth month in a row, potentially 'signaling a recession'

Newer

The Fed's monetary malpractice will cost you

Advisor News

  • DC plan sponsors see opportunity in alternatives
  • The American Dream: Redefined as financial stability
  • Partial annuitization: How advisors can help clients balance income, growth
  • Guide women along the walk through widowhood
  • Dutch gambling tax hike falls short as prediction markets eye World Cup
More Advisor News

Annuity News

  • KBRA Assigns Rating to TruSpire Retirement Insurance Company
  • Partial annuitization: How advisors can help clients balance income, growth
  • Guide women along the walk through widowhood
  • Regulators clear way to rewrite annuity illustration rules
  • Diversification’s growing importance in retirement planning
More Annuity News

Health/Employee Benefits News

  • As beer strike continues, community stands behind workers
  • Researchers at RTI International Report New Data on Managed Care (Tobacco Cessation Treatment in Pregnancy: Insights from Florida Medicaid Claims Data): Managed Care
  • Investigators from Medical University of South Carolina Have Reported New Data on Managed Care (Risk Factors Driving “no-shows” Across Orthopaedic Subspecialty Outpatient Clinics): Managed Care
  • New law provides clarity for firefighters’ health insurance
  • Appeals court tosses lawsuit accusing UnitedHealth of misleading seniors
More Health/Employee Benefits News

Life Insurance News

  • New York Life Launches an Indemnity Benefit for its Asset Flex Long-Term Care Insurance Solution
  • AM Best Affirms Credit Ratings of DB Insurance Co., Ltd.
  • AM Best Upgrades Credit Ratings of The People’s Insurance Company of China (Hong Kong), Limited
  • SWBC’s Joan Cleveland Reappointed to Texas Association of Life & Health Insurers (TALHI) Board of Directors
  • AM Best Introduces US Life Version of Best’s Capital Adequacy Ratio Model Product
More Life Insurance News

NEWS INSIDE

  • Companies
  • Earnings
  • Economic News
  • INN Magazine
  • Insurtech News
  • Newswires Feed
  • Regulation News
  • Washington Wire
  • Videos

FEATURED OFFERS

Press Releases

  • Prosperity Life GroupSM Launches Prosperity PathWaySM Series, Bringing Greater Choice and Flexibility to Retirement Income Planning
  • Senior Market Sales® Fortifies Annuity Reach With Acquisition of Retirement Planning Firm Stratton & Company
  • RFP #T01625
  • Rockwood Programs Appoints Kerry Ladouceur as Vice President, Financial Lines
More Press Releases > Add Your Press Release >

How to Write For InsuranceNewsNet

Find out how you can submit content for publishing on our website.
View Guidelines

Topics

  • Advisor News
  • Annuity Index
  • Annuity News
  • Companies
  • Earnings
  • Fiduciary
  • From the Field: Expert Insights
  • Health/Employee Benefits
  • Insurance & Financial Fraud
  • INN Magazine
  • Insiders Only
  • Life Insurance News
  • Newswires
  • Property and Casualty
  • Regulation News
  • Sponsored Articles
  • Washington Wire
  • Videos
  • ———
  • About
  • Meet our Editorial Staff
  • Advertise
  • Contact
  • Newsletters

Top Sections

  • AdvisorNews
  • Annuity News
  • Health/Employee Benefits News
  • InsuranceNewsNet Magazine
  • Life Insurance News
  • Property and Casualty News
  • Washington Wire

Our Company

  • About
  • Advertise
  • Contact
  • Meet our Editorial Staff
  • Magazine Subscription
  • Write for INN

Sign up for our FREE e-Newsletter!

Get breaking news, exclusive stories, and money- making insights straight into your inbox.

select Newsletter Options
Facebook Linkedin Twitter
© 2026 InsuranceNewsNet.com, Inc. All rights reserved.
  • Terms & Conditions
  • Privacy Policy
  • InsuranceNewsNet Magazine

Sign in with your Insider Pro Account

Not registered? Become an Insider Pro.
Insurance News | InsuranceNewsNet