- John Catsimatidis called on the Fed to halt its inflation-fighting rate hikes
- Annual inflation fell again in April but remained high at 4.9%
- Fed policymakers are expected to halt rate hikes at their June meeting
A billionaire grocery store boss has said food prices will continue to rise until Washington DC stops doing “stupid things”, as he calls on the Federal Reserve to halt interest rate hikes.
John Catsimatidis, a talk radio host and CEO of Manhattan grocery chain Gristedes, made this statement in an appearance on Fox Business this week.
It came after the latest data from the consumer price index showed that prices rose 4.9 percent in April from a year ago, down from a peak of 9.1 percent last summer, but still well above the Fed’s target of 2 percent.
Asked when Americans would see relief from rising inflation at the grocery store checkout, Catsimatidis replied, “When food leaders feel confident that Washington isn’t doing stupid things.”
“Right now everyone is panicking,” Catsimatidis said. “The bank managers are panicking, and the food managers are panicking. Everyone panics and says, what’s the next shoe that’s going to drop? Let’s take a break and see how things work out.
Catsimatidis lashed out at the Fed for its rate hikes to fight inflation, arguing that if rates go higher “you’re going to have 1981 again.”
In 1981, the economy entered a brief recession after the effective federal funds rate rose into the high-teens to combat skyrocketing inflation.
Earlier this month, the Fed raised interest rates for the 10th time in a row, a campaign that has taken the key rate from near zero early last year to a current range of 5 to 5.25 percent.
But Fed policymakers are widely expected to halt rate hikes at their next meeting in June, with markets pricing in an 85 percent chance of a pause starting Saturday, according to the CME FedWatch Tool.
“What we have to do is to calm the markets, and rates definitely must not go up,” Catsimatidis said. ‘I’d prefer they show they’re going to go down in the near future.’
Still, the billionaire grocery chain mogul seemed skeptical that inflation would fall back into the Fed’s target range in the near term, saying “it’s not going to be a 2% interest rate anywhere anytime soon.”
But he argued that the traditional method of tackling high inflation with higher borrowing costs cooling the economy needed to be “modified”.
“The fact is that we don’t want a bad economy. The American people don’t want a bad economy, he said.
“The vicious cycle is going to continue unless someone is smart enough in Washington to say enough is enough,” Catsimatidis said.
“The vicious cycle is going to continue unless someone is smart enough in Washington to say enough is enough,” he added.
General grocery prices fell 0.2 per cent in April from the previous month, but were still up 7.1 per cent from a year ago.
The prices of bacon, milk, citrus fruits and bacon all fell by at least 2 percent on the month, on a seasonally adjusted basis.
The latest statistics released by the US Labor Department on Wednesday showed that the consumer price index grew by 0.4 percent between March and April – four times the 0.1 percent increase from February to March.
Meanwhile, the labor market remains surprisingly strong despite the Fed’s tightening cycle, with the economy adding a robust 253,000 jobs last month and the unemployment rate matching a six-decade low of 3.4 percent.
A continued robust labor market could clear the way for the Fed to continue with further rate hikes, although that is not considered likely.
Fed chief Jerome Powell has signaled that the central bank may halt further rate hikes as it assesses the impact of previous tightening, as well as the effect of recent stress in the banking sector on lending and credit.
Since March, three regional US banks have failed, including the biggest bank collapse since the 2008 recession.
As a result, jittery bankers have clamped down on lending standards, tightening credit conditions in a move that should help cool inflation.