Grocery chain CEO calls for a halt to Fed interest rate hikes
A billionaire grocery store executive has said food prices will continue to rise until Washington DC stops doing 'dumb things,' while calling on the Federal Reserve to halt its interest rate hikes.
John Catsimatidis, a talk radio host and CEO of Manhattan grocery store chain Gristedes, made the remarks in an appearance on Fox Business this week.
It came after the latest consumer price index data showed prices rose 4.9 percent in April from one year ago, down from the 9.1 percent peak seen last summer but still well above the Fed's 2 percent target.
Asked when Americans would see relief from elevated inflation at the grocery store checkout, Catsimatidis responded, 'When the food executives feel confident that Washington is not doing dumb things.'
'Right now everybody's panicked,' Catsimatidis said. 'The bank executives are panicked and food executives are panicked. Everybody's panicked and say, what's the next shoe that's going to fall? Let's take a pause and let's see how things sort themselves out.'
John Catsimatidis, a talk radio host and CEO of Manhattan grocery store chain Gristedes, has called on the Federal Reserve to halt its interest rate hikes
The latest consumer price index data showed prices rose 4.9% in April from one year ago
Catsimatidis lashed out at the Fed for its interest rate hikes to fight inflation, claiming that if rates go higher 'you're going to have a 1981 all over again.'
In 1981 the economy entered a brief recession after the effective federal funds rate surged into the high teens to combat soaring inflation.
Earlier this month, the Fed raised rates for a 10th consecutive time, a campaign that has taken the policy rate from near zero early last year to a current range of 5 to 5.25 percent.
But Fed policymakers are widely expected to pause their rate hikes at their next meeting in June, with markets pricing in an 85 percent probability of a pause as of Saturday, according to the CME FedWatch Tool.
'What we have to do is calm the markets and the rates have to definitely not go up,' said Catsimatidis. 'I prefer that they show that they are going to go down in the near future.'
Still, the billionaire grocery chain mogul appeared skeptical that inflation would fall back to the Fed's target range in the near term, saying 'there's not going to be a 2% rate anywhere soon.'
But he argued that the traditional method of tackling high inflation with higher borrowing costs that cool the economy needed to be 'modified'.
A shopper walks through a grocery store in Washington, DC in a file photo. Grocery shoppers are still seeking relief from rapid price increases as inflation remains stubbornly high
'The fact is that we don't want a bad economy. The American people don't want a bad economy,' he said.
'The vicious circle is going to continue unless somebody is smart enough in Washington to say enough is enough,' Catsimatidis said.
'The vicious circle is going to continue unless somebody is smart enough in Washington to say enough is enough,' he added.
Overall grocery prices dipped 0.2 percent in April from the month before, but were still up 7.1 percent from one year ago.
Prices for bacon, milk, citrus fruits and bacon all dropped at least 2 percent on the month, on a seasonally adjusted basis.
The latest statistics released by the US Labor Department on Wednesday showed the consumer price index grew by 0.4 percent between March and April - four times the 0.1 percent increase seen between February and March.
The central bank has raised key interest rates by 5 percentage points since March 2022
Fed Chair Jerome Powell has signaled the central bank may pause further rate hikes as it assesses the impact of its past tightening
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 at 3.4 percent.
A continued robust job market could clear the path for the Fed to continue with further rate hikes, though that is not seen as likely.
Fed Chair Jerome Powell has signaled the central bank may pause further rate hikes as it assesses the impact of its past tightening, as well as the effect of recent bank sector stress on lending and credit.
Since March, three regional US banks have failed, including the largest bank collapse since the 2008 recession.
As a result, nervous bankers have cracked down on lending standards, tightening credit conditions in a move that should help in cooling inflation.
Source: Daily Mail
