The White House reacted Wednesday to the news of another interest rate hike by the Federal Reserve, calling it “part of our transition to stable and steady growth.”
The Fed is aggressively raising interest rates in an effort to tame runaway inflation, but the move also risks triggering a recession. White House press secretary Karine Jean-Pierre was informed of another 75 basis point interest rate hike during Wednesday’s briefing.
“The Fed is an independent agency and we respect their independence,” she said. “The Fed’s actions will help bring inflation down, and as mortgage rates increase, demand in the housing market should continue to cool. Inventory should increase, which should have the effect of lowering housing inflation.”
SOARING MORTGAGE RATES ADD TO BIDEN MIDTERM HEADACHES
Mortgage interest rates have more than doubled in 2022, rising from 3% in January to more than 7% today. The effect is that mortgages are harder to obtain, which has a cooling effect on prices.
The Fed’s overall interest rate target has risen by 3% in the past six months, the most forceful rate hikes since the Great Inflation of the late 1970s and early 1980s. The target is now 3.75% to 4%, the highest it has been since the financial crisis in 2008.
Some Democrats, such as Sen. Elizabeth Warren (D-MA), have called for the Fed to stop interest rate hikes as it could cripple the economy. But President Joe Biden and the White House have so far not joined in those calls.
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“This is part of our transition to stable and steady growth,” Jean-Pierre said. “Stable and steady growth with lower inflation is the kind of economy that delivers for working families, and that’s how we see the work of the Fed.”
Inflation has remained high so far in spite of the interest rate hikes, at 8.2% as of the latest report.
