Federal Reserve Chair Jerome Powell insists he won’t cause a deep recession but that “pain” is necessary to fight inflation.

By Ken Klippenstein, The Intercept

On Thursday, following reports that the Federal Reserve would likely soon jack up the federal interest rate again — this time by 0.75 percentage points — Chair Jerome Powell tried to allay fears that the Fed’s strategy would cause an economic downturn, insisting that another rate hike was unlikely to cause a deep recession.

United States Federal Reserve Bank building on ConstitutUnited States Federal Reserve Bank building on Constitution Avenue.ion Avenue.

The interest rate hikes, which nominally serve as a way for the Federal Reserve to tamp down inflation, are also a way to put economic power back in the hands of the very rich by driving up unemployment, since higher interest rates make it more expensive for banks to loan people money, leading to scarcer investment and therefore fewer jobs.

Powell downplayed the effect the Federal Reserve’s moves were likely to have on working people. “We think we can avoid the very high social costs that Paul Volcker and the Fed had to bring into play to get inflation back down,” Powell said, referring to the period in the 1980s when the Fed similarly hiked interest rates and engineered a recession.

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