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jackson hole
Fed Urged to Quickly Slash Rates as Powell Warns of 'Downside Risks to Employment'
"Let's be clear: The Fed has all the data it needs to cut rates now—and it's past time to deliver relief for the American people," said the Groundwork Collaborative.
Aug 23, 2024
Federal Reserve Chairman Jerome Powell admitted during a closely watched speech Friday that the central bank's decision to keep interest rates high for an extended period has increased the risk of a labor market downturn, which could threaten the jobs and livelihoods of millions of U.S. workers.
After holding the federal funds rate steady at 5.25% to 5.50% for more than a year—even as economists and lawmakers warned of the harmful impacts on working-class Americans, the housing market, and the broader U.S. economy—Powell conceded Friday that "the time has come for policy to adjust," a strong signal that the Fed will cut rates at its September meeting.
"The inflation and labor market data show an evolving situation," Powell said in his remarks in Jackson Hole, Wyoming, the site of what's been described as "the world's most exclusive economic get-together."
"The upside risks to inflation have diminished," the Fed chair continued. "And the downside risks to employment have increased."
"The direction of travel is clear," he added, "and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks."
The Fed's high interest rates are pushing people into debt and making life unaffordable for millions of families
Powell's remarks came two days after the U.S. Labor Department issued a significant downward revision of the nation's job growth estimates for 2023 and early 2024, heightening concerns that the Fed has waited too long to reduce interest rates. In the 12 months that ended in March 2024, the U.S. added around 818,000 fewer jobs than the Labor Department previously believed, according to the new figures.
"Let's be clear: The Fed has all the data it needs to cut rates now—and it's past time to deliver relief for the American people," the Groundwork Collaborative, a progressive think tank, said Friday in response to Powell's speech.
In a Thursday statement, Groundwork chief economist Rakeen Mabud called on the Fed to cut interest rates by "at least 75 basis points" at its meeting next month.
"The Fed's high interest rates are pushing people into debt and making life unaffordable for millions of families," said Mabud. "The biggest threat to the economy is not inflation, it's the Fed."
Bharat Ramamurti, senior adviser for economic strategy at the American Economic Liberties Project and former deputy director of the White House National Economic Council, also implored the Fed to "move quickly" on interest rate reductions "to avoid unnecessary harm to workers."
Inflation has fallen dramatically in the U.S. since it peaked at 9.1% in June 2022, but the Fed opted during its latest policy meeting last month to keep interest rates at a two-decade high for the 12th consecutive month.
The decision prompted the Revolving Door Project (RDP), a progressive watchdog group, to accuse Powell of succumbing to political pressure from Republican nominee Donald Trump and other Republicans who have warned the Fed chair to keep rates elevated until after the November elections.
Trump originally nominated Powell in 2017, and President Joe Biden decided to renominate the Fed chair for another four-year term despite progressive opposition.
Jeff Hauser, RDP's executive director, said earlier this week that "with the possible exception of Attorney General Merrick Garland, Federal Reserve Chair Jerome Powell is the worst appointee in President Joe Biden's administration."
"The sad irony is that Biden didn't have to renominate a Republican private equity executive to lead the Fed in 2022; in fact, we implored him not to," said Hauser. "Our concerns about Powell's ethical shortcomings, fickle commitment to full employment, and fealty to deregulation have, sadly, been borne out by his actions."
"Should she win the upcoming election," Hauser added, "Democratic presidential nominee Kamala Harris must heed the lessons of the Powell era and nominate a central bank leader without compromising ties to Wall Street who is dedicated to maximizing employment and strengthening financial regulation."
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Climate Campaigners Decry 'Absolutely Horrendous' Brutality Against Protesters at Fed Summit
"We have no choice but to take direct action to put our bodies on the line because petitions, sign-waving, and chanting—we tried that for the past 50 years and it hasn't worked, and we're out of time," said one arrested activist.
Aug 25, 2023
Climate campaigners on Friday condemned the violent takedown of activists during a demonstration at the annual Jackson Hole Economic Policy Symposium in Wyoming, an elite gathering where U.S. Federal Reserve officials, central bankers from around the world, economists, and policymakers meet, mingle, and craft financial policies that critics say are exacerbating the planetary emergency.
Multiple videos posted on social media by the direct action group Climate Defiance show law enforcement officers slamming a pair of activists on a hard floor as they chant, "End fossil finance" at the conference, which is hosted by the Federal Reserve Bank of Kansas City. This year's theme is "Structural Shifts in the Global Economy."
One activist—25-year-old Teddy Ogborn of the group Planet Over Profit—was arrested, while other demonstrators were cited for criminal trespass, according to Eren Can Ileri, a policy advocate at the Stop the Money Pipeline coalition.
"I'm feeling a little sore but in pretty high spirits just thinking about the fact that someone has to be confronting these financial regulators who are actively choosing to fuel the climate crisis and burning the Rocky Mountains, where I'm from," Ogborn told Common Dreams.
"I am part of a global movement of young activists who see the world around us and know that progress is not being made fast enough on climate change," he continued. "People are climate laggards, they are climate delayists, they're climate deniers, and all that together means death in the near term for our futures and society as we know it."
"People want to do business as usual," Ogborn added. "Financial regulators have billionaire friends who want to watch the world burn from space. And so we have no choice but to take direct action to put our bodies on the line because petitions, sign-waving, and chanting—we tried that for the past 50 years and it hasn't worked, and we're out of time."
Ileri, who was also at the protest, told Common Dreams: "We tried to exert our democratic rights today. We tried to peacefully, nonviolently, and constructively engage the Federal Reserve on policy positions we believe are needed to save our futures. They showed us they were not open to conversation through their violence toward our activists but also by whisking the Fed chair away when we tried to approach him conversationally."
Federal Reserve Chair Jerome Powell once again took a hawkish stance during a speech in which he said that "although inflation has moved down from its peak—a welcome development—it remains too high," and that the Fed is "prepared to raise rates further if appropriate."
Powell did not address the climate emergency or the role central banks play in fueling it. Ileri asserted that "by isolating themselves from communities facing the real economy impacts of the climate crisis," Powell and other central bankers "are allowing themselves to define risk in a way that doesn't match the risks that normal Americans face on a day-to-day basis due to the climate breakdown."
Stop the Money Pipeline co-director and San Francisco Board of Supervisors candidate Jackie Fielder responded to the heavy-handed police tactics by telling Common Dreams that "it's absolutely horrendous how security and law enforcement would assault young climate activists who are simply calling out climate denialism at the Fed."
The direct action came as a coalition of more than 70 climate advocacy groups from around the world on Friday called on policymakers—especially in the banking and insurance sectors—to:
- Adopt a precautionary approach to risk mitigation, given climate change's tipping points and unpredictable tail risks;
- Design capital buffers that specifically take into account the systemic risks of climate change; and
- Require the use of forward-looking tools, such as transition plans, which can help both authorities and market participants better understand and mitigate their own climate-related transition risks, as well as improve understanding of aggregated, systemic risks and promote accountability.
"Any symposium entitled 'Structural Shifts in the Global Economy' without a single mention of climate disasters and the billions they have cost everyday people and local economies should concern every American with a pension who agrees that climate change is here," Fielder said in a separate statement.
Akiksha Chatterji, lead campaigner at Positive Money U.S., a research and campaigning group "working to reimagine money, banks, and our economy for the well-being of people, communities, and the planet," said that "regulators are failing to act at the scale or pace necessary to curb the significant financial stability threats arising from climate change and fossil fuel financing."
"Rest assured, climate risks will materialize and we simply cannot quantify the precise nature and timing of these impacts as they are complex and ever-changing," she continued. "Emergency measures taken after a climate-driven financial crash may not suffice to contain such a meltdown."
"It's time," Chatterji added, "for the regulators and officials at this symposium to adopt a precautionary approach to climate and do their jobs before another financial crisis ensues."
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