<p><a href="http://dailywire.com/topic/federal-reserve">Federal Reserve</a> Governor Christopher Waller warned on Saturday that efforts from the central bank to tackle <a href="http://dailywire.com/topic/inflation">inflation</a> would produce higher <a href="http://dailywire.com/topic/unemployment">unemployment</a>.</p>
<p>Last week, Fed policymakers announced that they would take action to <a href="https://www.dailywire.com/news/federal-reserve-takes-most-aggressive-action-to-fight-inflation-in-three-decades">hike interest rates</a> by 0.75% — the boldest move to combat inflation since 1994. The central bank already <a href="https://www.dailywire.com/news/the-fed-jacks-key-rate-up-half-point-as-inflation-surges">increased rates</a> by 0.5% in May, the largest such increase since 2000, following a 0.25% rate hike from near-zero levels in March.</p>
<p>Waller, one of the seven policymakers charged with determining the Fed’s monetary policy, said at a conference in Dallas that monetary tightening could drive unemployment to 4% or 4.25%, per <a href="https://www.reuters.com/business/finance/feds-waller-wants-another-75-basis-point-hike-all-in-inflation-fight-2022-06-18/">Reuters</a>. According to the U.S. <a href="https://fred.stlouisfed.org/series/UNRATE">Bureau of Labor Statistics</a>, the unemployment rate is presently 3.6% — almost as low as the level that prevailed before COVID-19 and the lockdown-induced recession.</p>
<p>Meanwhile, the Consumer Price Index (CPI) increased <a href="https://www.dailywire.com/news/inflation-reaches-8-6-setting-new-four-decade-high">8.6%</a> year-over-year as of May, while the Producer Price Index (PPI) — which tracks inflation for wholesalers — increased <a href="https://www.dailywire.com/news/inflation-for-businesses-continues-at-double-digit-pace">10.8%</a> over the same period, according to two recent reports from the Bureau of Labor Statistics.</p>
<p>The Federal Open Market Committee, which handles the central bank’s monetary policy interventions, has a <a href="https://www.investopedia.com/articles/investing/100715/breaking-down-federal-reserves-dual-mandate.asp">dual mandate</a> to maximize employment while keeping inflation low. Historically, there is a tradeoff between the two goals, with low unemployment associated with higher inflation and high inflation associated with lower unemployment.</p>
<p>“A falling unemployment rate signals an increase in the demand for labor, which puts upward pressure on wages,” <a href="https://www.stlouisfed.org/open-vault/2020/january/what-is-phillips-curve-why-flattened">Federal Reserve Bank of St. Louis</a> economist and researcher Kevin Kliesen explained in January 2020. “Profit-maximizing firms then raise the prices of their products in response to rising labor costs.”</p>
<p>At the conference, Waller indicated that he would be open to additional bold actions meant to combat inflation. &#8220;If the data comes in as I expect, I will support a similar-sized move at our July meeting,&#8221; Waller said of another 0.75% rate hike. &#8220;The Fed is ‘all in&#8217; on reestablishing price stability.&#8221;</p>
<p>The Fed’s benchmark interest rate is now between 1.5% and 1.75%. Rate hikes increase the cost of borrowing money for businesses and consumers — a move that tends to cut inflation at the expense of economic activity.</p>
<p>“Job gains have been robust in recent months, and the unemployment rate has remained low,” the Federal Open Market Committee diagnosed in a <a href="https://www.federalreserve.gov/newsevents/pressreleases/monetary20220615a.htm">statement</a> last week. “Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher energy prices, and broader price pressures.”</p>
<p>While monetary policymakers have taken action against inflation following <a href="https://www.dailywire.com/news/top-hedge-fund-manager-sees-two-ways-out-of-soaring-inflation-and-neither-one-is-pretty">calls from Wall Street</a>, President Joe Biden continues to point toward the Russian invasion of Ukraine as the driver of soaring prices.</p>
<p>“Putin’s Price Hike hit hard in May here and around the world: high gas prices at the pump, energy, and food prices accounted for around half of the monthly price increases, and gas pump prices are up by $2 a gallon in many places since Russian troops began to threaten Ukraine,” Biden <a href="https://www.dailywire.com/news/president-biden-blames-vladimir-putin-for-record-high-inflation">argued</a> two weeks ago in a statement. “Even as we continue our work to defend freedom in Ukraine, we must do more — and quickly — to get prices down here in the United States.”</p>
<p>The month of June has been marked by multiple <a href="https://www.dailywire.com/news/dow-plummets-below-30000-down-almost-20-this-year-under-biden">stock market selloffs</a> amid the poor inflationary news and the Fed’s subsequent action.</p>

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Expect Higher Unemployment As Federal Reserve Tackles Inflation, Warns Top Policymaker