Trumka urges Fed against rate hike

Trumka urges Fed against rate hike
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One of the nation’s largest labor unions is publicly pushing the Federal Reserve to avoid an interest rate hike.

AFL-CIO President Richard Trumka called on the Fed to steer clear of a widely expected rate hike Wednesday. He argued that the economy still has not recovered enough for working Americans, and the Fed could do more to boost the economy before raising rates.

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“We urge the Fed to avoid making a mistake by raising interest rates tomorrow,” he said in a statement. “Too many working people are not feeling the economic recovery because of stagnant wages. In the months to come, the Fed should focus on the policy goal that real wages should rise with productivity.”

The Fed is holding a two-day meeting this week, after which it is widely expected the central bank will announce its first rate increase in nearly a decade. The central bank slashed rates in response to the financial crisis and embarked on several unprecedented rounds of stimulus beyond that in an effort to steer the nation through the recession.

With the economy seemingly back on track, the Fed has indicated that it is getting ready to begin to slowly raise interest rates. The central bank has also been under pressure for years from conservatives to tighten up its monetary policy, as Republicans in Congress and elsewhere have argued the Fed’s efforts to stimulate the economy have been ineffective and risk damaging inflation down the road.

But pointing to slow growth in wages and inflation that is still below ideal levels, many on the left are pushing for the Fed to pump the brakes and ensure Americans across the pay spectrum feel the comeback.

But such an effort may be too little, too late. Former Fed Chairman Ben Bernanke, who led the Fed’s dramatic efforts to navigate through the Great Recession, said in an interview it looks like a hike is coming.

“Evidently the market thinks the Fed will, this week, raise the federal funds rate,” he told Marketwatch. “The good news is that the U.S. economy has made a lot of progress, unemployment is down to 5%, we’ve had moderate growth, the domestic economy, particularly, is pretty strong.”