White House Economist Says Fed's Rate Hikes Having Negative Impact On Banking Sector — Yes, You Read It Right!

Heather Boushey, a member of the White House Council of Economic Advisers reportedly said that Federal Reserve's interest rate hikes aimed at reining-in inflation were having a negative impact on the banking sector and warned Republicans against worsening the situation with their debt ceiling threats.

What Happened: Bushey said that Republicans should not be “playing games” with the U.S. economy by connecting the debt ceiling raise to budget cuts, reported Reuters.

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“The economy remains, it’s been strong. You don’t want to be pushing it off of the course that it’s on,” she said, while urging Republicans to support a debt ceiling increase without conditions.

“The Fed is raising interest rates in the hope of reducing inflation. That is having this negative effect on the banking sector. Why would we add to that?” she said, according to the report.

Fed Policy: Boushey also stated Congress could easily remove the risk of default by increasing the debt ceiling but the issue of interest rates and their impact on bank assets was a far more complicated question that no single entity had the power to solve.

“This is terrible. It’s scary. We should not be be playing these kind of games with the U.S. economy and with the full faith and credit of the United States,” she said. “We need to be focused on how we’re going to keep the economy moving.”

The White House on Tuesday reiterated President Joe Biden will not negotiate over the default during his meeting with the four top congressional leaders next week. Biden said in his tweet the U.S. has never failed to repay its debt but the country was being held hostage by MAGA Republicans.

Photo: Courtesy of Wikimedia Commons

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