- Senate Banking Chair Sherrod Brown expressed concerns with the Fed's inflation-fighting tactics.
- He said hiking interest rates could be too aggressive and trigger job losses.
It's the Federal Reserve's job to combat rising prices in the country — but a top Democratic lawmaker isn't happy with the way it's choosing to do so.
On Tuesday, Senate Banking Chair Sherrod Brown sent a letter to Fed Chair Jerome Powell expressing concerns with the methods the central bank is using to fight inflation. The Fed is tasked with maintaining full employment, along with stabilizing prices, but Brown said that the recent interest rate hikes — intended to slow price growth by slowing down economic activity — could compromise the goal of maximum employment and cause a stream of job losses.
"The Federal Reserve's tools work to lower inflation by reducing demand for economic activities sensitive to interest rates," Brown wrote. "However, a family's 'pocketbook' needs have little to do with interest rates, and potential job losses brought about by monetary over-tightening will only worsen these matters for the working class."
"For working Americans who already feel the crush of inflation, job losses will make it much worse. We can't risk the livelihoods of millions of Americans who can't afford it," he added.
Brown's letter comes ahead of the Federal Open Market Committee (FOMC) meeting next week, where Powell is expected to announce another interest rate hike. Last month, the committee hiked rates 0.75 percentage points, which was three times larger than the Fed's usual uptick. It reflects the aggressive tactics it's using to tackle inflation, but continuing those hikes could trigger a recession, and in turn, job losses that lower-income households could have difficulty recovering from given that "upper-income households are better able to protect their wealth during economic downturns and seize future wealth-building opportunities when the economy recovers," Brown wrote.
"Due to this disparity, inflation and recessionary job losses increase the gap between upper- and lower-income households and widen the divide between racial groups," he wrote.
Other Democratic lawmakers have expressed concerns with the Fed's inflation-fighting tactics, as well. Earlier this month, Vermont Sen. Bernie Sanders told NBC that the central bank is "hurting the situation. It is wrong to be saying that the way we're going to deal with inflation is by lowering wages and increasing unemployment," he said. And in August, Massachusetts Sen. Elizabeth Warren told CNN she is "very worried that the Fed is going to tip the economy into recession."
Still, Powell has maintained in prior remarks that acting aggressively through interest rate hikes is the best way to combat inflation even though the economy could experience "some pain," and he will keep doing so until high price levels cool down.
"We need to act now, forthrightly, strongly, as we have been, and we need to keep at it until the job is done to avoid that," he said.