Fed rate hike will have 'devastating impact,' former CEO warns
Former Home Depot and Chrysler CEO Bob Nardelli discusses the impact of a potential rate hike from Federal Reserve to tame inflation.
Former Home Depot CEO Bob Nardelli warned on "America Reports" Wednesday that the Federal Reserve hiking interest rates to cool inflation will have a "devastating impact" on consumers.
"I would tell the consumer, make sure that you're building up cash reserves," Nardelli emphasized. "Build up a supply of non-perishables in your home. Make sure that you're prepared for sustainable inflationary periods."
Nardelli's remarks came ahead of the Federal Reserve's announcement Wednesday which stated it raised its benchmark interest rate by 75 basis points for the first time in nearly three decades.
The Fed's decision comes in response to record-high inflation and shrinkflation which has crippled the nation's economy for months. May's Consumer Price Index (CPI) showed an 8.6% inflation which has steadily increased since President Biden entered office.
ECONOMIST MOHAMED EL-ERIAN: MOST CURRENT INFLATION ‘COULD HAVE BEEN AVOIDED’ IF FED ACTED EARLIER
U.S. President Joe Biden (C) meets with Federal Reserve Chairman Jerome Powell and Treasury Secretary Janet Yellen, in the Oval Office at the White House on May 31, 2022 in Washington, DC. The three met to discuss the Biden Administration's plan to combat record-high inflation. (Photo by Kevin Dietsch/Getty Images)
"Every time you go to the store, what you're going to see is they're trying to avoid sticker shock," Nardelli shared. "So you're paying $5 or something for a consumable item. The fact is you may have 10, 20, 30% less in that bag or in that can. So that's really the inflationary number that doesn't always get accurately reported in the 8.6%."
Despite the financial strain many Americans feel at the pump and in grocery stores, the White House has remained optimistic about the economic situation and praised inflation as part of the transition to a green energy economy.
Economists and analysts are divided on how long the inflationary period could last and what the immediate after-effects of the Fed's decision Wednesday will be. It is certain Americans are not yet in the clear.
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"What really scared me to death is when I heard the president's administration say there's really nothing we can do to affect this period and the situation that we're in today," Nardelli said. "That is just an unconscionable response to the demands and the issues we're facing."