Fed is going too far with interest rate hikes, which could cost all of us

The most recent announcement by Federal Reserve Chairman Jerome Powell to raise interest rates another 75-basis points was one that the markets and economists had expected. But what’s less clear is how long the Fed may maintain its course on raising interest rates. It was the fourth consecutive 75-basis-point hike in as many meetings of the Fed. Powell and Fed officials have stated the persistent rate of inflation is forcing their hand in the matter. On Monday, the CEO of Gulf Coast Bank and Trust CEO appeared on the Newell Normand show to discuss the worrisome shift in the Fed’s messaging on future rate increases.

“Chairman Powell added some context this time that was a little concerning. He said we don’t want to make the mistake of stopping too soon or with a rate that’s too low. And so, the indication is he may not do 75 basis points every meeting, but not planning to stop anytime soon and planning to go a bit higher than people had expected, which is already having a really rough impact on different segments of the economy,” Williams told Newell.

Williams said he believes Powell is concerned about stopping the raising of interest rates too soon. Williams told Newell when the Fed had done that in the past, inflation came “roaring back.” But in attempts to avoid past mistakes Williams says Powell will likely commit another one and add undo damage to sectors of the economy that have quickly fractured because of the consecutive interest rate hikes by the Fed.

“I don’t think he’s looking carefully at some of the damage that’s already been done. I mean real estate is already coming to a screeching halt. I spoke to a friend over the weekend. He said his son is an electrician and they finished their last big job last week and the company said look, we’re going to lay you off until we have more work. So, that impact is already occurring,” Williams said.