The lone dissenting vote in the Federal Reserve’s big rate hike this week said Friday she opposed the move because she worried it would “add to uncertainty” and unsettle American families and businesses.
Kansas City Federal Reserve Bank President Esther George has been a strong advocate for raising the benchmark lending rate in a bid to cool the fastest US inflation in more than 40 years.
However, she was the only voting member of the policy-setting Federal Open Market Committee to argue against the three-quarter point hike announced Wednesday, preferring a smaller half-point increase.
“With high inflation and a tight economy, the case for continuing to remove policy accommodation is clear-cut,” she said in a statement.
“However, the speed with which we adjust the policy rate is important.”
The move this week, the first 75-basis-point increase since November 1994, came as the Fed begins to reduce the massive stockpile of assets built up during the pandemic.
“I viewed that move as adding to policy uncertainty,” she said, noting that “significant and abrupt changes can be unsettling to households and small businesses as they make necessary adjustments.”
Prior to this week’s policy meeting, Fed officials telegraphed plans to raise rates by 50 basis points, but a surprise resurgence of inflation in May changed the calculus.
And Fed Chair Jerome Powell said after the FOMC meeting that another three-quarter point hike is possible in July, because it is “essential” to rein in scorching inflation.
The aggressive posture has raised fears that the world’s largest economy might face a recession in the effort to tame price increases, which have been exacerbated by the Russian invasion of Ukraine and ongoing Covid-related lockdowns in China.
