Fed rate hike will have ‘devastating’ impact on consumers, warns former Home Depot CEO
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Former Home Depot CEO Bob Nardelli warned Wednesday in “America Reports” that raising interest rates by the Federal Reserve to calm inflation would have a “devastating impact” on consumers.
“I would say to the consumer, be sure to build up some cash reserves,” Nardelli pointed out. “Build up a supply of non-perishable food in your home. Make sure you are prepared for periods of sustained inflation.”
Nardelli’s remarks preceded the Federal Reserve’s announcement on Wednesday which said it had raised its benchmark interest rate by 75 basis points for the first time in nearly three decades.
The Fed’s decision comes in response to record inflation and a contraction in inflation that has crippled the national economy for months. The consumer price index (CPI) for May showed inflation of 8.6% which has been rising steadily since President Biden took office.
ECONOMIST MOHAMED EL-ERIAN: MOST CURRENT INFLATION “COULD HAVE BEEN AVOIDED” IF THE FED HAD ACTED EARLIER
US President Joe Biden (C) meets with Federal Reserve Chairman Jerome Powell and Treasury Secretary Janet Yellen, in the Oval Office of the White House May 31, 2022 in Washington, DC. The three met to discuss the Biden administration’s plan to tackle record high inflation.
(Photo by Kevin Dietsch/Getty Images)
“Every time you go to the store, what you’re going to see is that they’re trying to avoid sticker shock,” Nardelli explained. “So you’re paying $5 or something for a consumable item. The point is, you can have 10, 20, 30 percent less in that bag or in that box. So that’s really the inflationary number that’s not not always reported accurately within 8.6%.
Despite the financial pressure many Americans are feeling at the pump and in grocery stores, the White House remained optimistic about the economic situation and welcomed inflation as part of the transition to a green energy economy.
Economists and analysts are divided on the duration of the inflationary period and the immediate consequences of the Fed’s decision on Wednesday. It is certain that the Americans are not yet clear.
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“What really scared me was when I heard the presidential administration say that there was really nothing we could do to affect this period and the situation we find ourselves in today. today,” Nardelli said. “It’s just an inadmissible response to the demands and issues we face.”
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