The chief economist at the global investment bank UBS, the world\u0026#039;s largest wealth manager, argued in an op-ed for the Financial Times on Wednesday that inflation in the United States \u0022is more a product of profits than wages\u0022 and criticized Federal Reserve Chair Jerome Powell for refusing to acknowledge that fact as he plows ahead with massive interest rate hikes.\r\n\r\n\u0022Powell\u0026#039;s public remarks offer little insight into how he expects higher rates to tame inflation,\u0022 Paul Donovan of UBS Global Wealth Management wrote just ahead of the Fed\u0026#039;s latest interest rate increase of 75 basis points. \u0022This is the current inflation story. Companies have passed higher costs on to customers. But they have also taken advantage of circumstances to expand profit margins. The broadening of inflation beyond commodity prices is more profit margin expansion than wage cost pressures.\u0022\r\n\r\n\u0022Even a major bank\u0026#039;s chief economist now admits that corporations are price gouging under the guise of inflation.\u0022\r\n\r\n\u0022Despite negative real wages, consumers have carried on consuming,\u0022 Donovan added. \u0022Consumers seem to be buying stories that seem to justify price increases, but which really serve as cover for profit margin expansion... This unconventional inflation means higher unemployment and lower wages are not the only possible cure for it. Policy has more routes to lower inflation if the cause is about profits.\u0022\r\n\r\nThus far, though, the Powell-led Federal Reserve has primarily used interest rate increases in its as-yet unsuccessful effort to bring down inflation, even as critics warn that such an approach harms workers and risks a devastating recession without tackling the primary drivers of price increases.\r\n\r\nAt his Wednesday press conference, Powell once again conceded that rate hikes \u0022don\u0026#039;t directly affect for the most part food and energy prices,\u0022 two major sources of inflation dictated by profit-seeking corporations such as Exxon, Chevron, and Pepsi.\r\n\r\n\u0022We increased prices at the beginning of the fourth quarter based on what we knew at that point,\u0022 Pepsi\u0026#039;s chief financial officer said on the company\u0026#039;s earnings call last month. \u0022And going forward, with the investments that we\u0026#039;ve made in brands, I still think we\u0026#039;re capable of taking whatever pricing we need.\u0022\r\n\r\nDuring his public appearance Wednesday, Powell wasn\u0026#039;t asked a single question about the role corporate profiteering has played in causing high inflation even as executives boast about their enormous pricing power.\r\n\r\n\r\n\r\nProgressive advocates and economists who have been spotlighting corporate America\u0026#039;s inflationary profiteering for months seized on Donovan\u0026#039;s Financial Times op-ed as further evidence that their data-driven argument is gradually piercing the mainstream, even as Powell ignores it.\r\n\r\n\u0022Even a major bank\u0026#039;s chief economist now admits that corporations are price gouging under the guise of inflation,\u0022 the American Economic Liberties Project tweeted Thursday.\r\n\r\nChristian Hallum, tax justice lead at Oxfam International, added that \u0022skyrocketing profits are to blame for inflation, according to the chief economist at UBS Global Wealth Management.\u0022\r\n\r\n\u0022Maybe we should tax windfall profits instead of trying to create unemployment through interest rate hikes?\u0022 Hallum suggested.