A billionaire grocery store executive says food prices will continue to rise until Washington DC stops doing ‘dumb things’, while calling on the Federal Reserve to stop its interest rate hikes .
John Catsimatidis, radio host and CEO of Manhattan grocery chain Gristedes, made the remarks during an appearance on fox business this week.
It came after the latest consumer price index data showed prices rose 4.9% in April from a year ago, down from a peak of 9.1 % recorded last summer, but still well above the Fed’s 2% target.
When asked when Americans would see relief from high inflation at the grocery checkout, Catsimatidis replied, “When food leaders are convinced that Washington isn’t messing around.”
“Right now everyone is freaking out,” Catsimatidis said. “Bank executives are panicked and food executives are panicked. Everyone is freaking out and wondering what the next shoe is going to drop? Let’s take a break and see how things work out.
John Catsimatidis, radio host and CEO of Manhattan grocery chain Gristedes, called on the Federal Reserve to halt interest rate hikes
The latest Consumer Price Index data showed prices rose 4.9% in April from a year ago
Catsimatidis lashed out at the Fed for raising interest rates to fight inflation, saying if rates go up “you’re going to start all over again in 1981.”
In 1981, the economy entered a brief recession after the effective federal funds rate hit the 1980s to combat soaring inflation.
Earlier this month, the Fed raised rates for the 10th consecutive time, a campaign that took the benchmark rate from near zero at the start of last year to a current range of 5-5.25% .
But Fed policymakers are expected to pause rate hikes at their next meeting in June, with markets pricing in an 85% chance of a pause from Saturday, according to the CME FedWatch Tool.
“What we need to do is calm the markets and rates absolutely must not rise,” Catsimatidis said. “I prefer that they show that they will fall in the near future.”
Still, the billionaire grocery chain tycoon seemed skeptical inflation would return to the Fed’s target range in the near term, saying ‘there won’t be a 2% rate anytime soon’ .
But he argued that the traditional method of tackling high inflation with higher borrowing costs that chill 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, we don’t want a bad economy. The American people don’t want a bad economy,” he said.
“The vicious cycle will continue unless someone in Washington is smart enough to say enough is enough,” Catsimatidis said.
“The vicious cycle will continue unless someone in Washington is smart enough to say enough is enough,” he added.
Overall food prices fell 0.2% in April from the previous month, but were still up 7.1% from a year ago.
Bacon, milk, citrus and bacon prices all fell at least 2% in the month, on a seasonally adjusted basis.
The latest statistics released by the US Department of Labor on Wednesday showed the consumer price index rose 0.4% between March and April, four times the 0.1% increase seen between February and March. .
The central bank has raised its key rates by 5 percentage points since March 2022
Fed Chairman Jerome Powell has signaled that the central bank may suspend 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%.
A still-robust labor market could pave the way for further rate hikes by the Fed, although this is not seen as likely.
Fed Chairman Jerome Powell has signaled that the central bank may suspend further rate hikes as it assesses the impact of its past tightening, as well as the effect of recent banking sector stress on lending and credit.
Since March, three U.S. regional banks have failed, including the biggest bank failure since the 2008 recession.
As a result, jittery bankers have cracked down on lending standards, tightening credit conditions in a move that should help calm inflation.
