WASHINGTON (Newsweek) -- Steve Forbes, editor-in-chief of Forbes Media, is warning that “making people poor” to solve inflation will result after the Federal Reserve hiked interest rates last week and many economists voiced concern about a possible recession.
Rising prices, caused by multiple factors such as the Russia-Ukraine war, have become one of the top issues for American voters in recent months, as consumers see costs surging for numerous products and services, including food and gas. Last week, the high inflation rate prompted the Federal Reserve to announce its highest interest rate increase in 28 years.
The move is aimed at discouraging people from spending money, particularly on major purchases such as a house, and decreasing demand, which is expected to eventually lower prices.
Forbes said in an interview with conservative news outlet Newsmax that raising interest rates will have severe effects on consumers.
“Let’s be blunt about it. When they talk about a soft landing or trying to slow the economy down, that means making people poor,” he said. Rather than “punish the American economy” with higher interest rates, the Fed should focus its efforts on stabilizing the value of the dollar, he added.
Forbes predicted the interest rate hikes will particularly hurt consumers when “mortgage rates are readjusted later this year” and heating prices rise in the winter.
“A big, bad thing is happening. And when heating oil prices come in this winter, when you’re paying twice as much as you were before and you have to heat your home, that’s going to be a disaster,” he said. “So whatever they want to call it, it’s not good.”
Forbes’ remarks come as Biden administration officials try to subdue fears that a recession is likely in the near future. Nearly seven in 10 economists anticipate a recession will come within the next year. Meanwhile, Americans are feeling the economic fallout after the inflation rate hit 8.6 percent in May, with national gas prices reaching $5 per gallon this month.
However, Treasury Secretary Janet Yellen said during a Sunday appearance on ABC News she believes that the Fed can bring down inflation while maintaining a strong employment market and that doing so may not necessarily lead to a recession.