Federal Reserve Chairman Jerome Powell on Wednesday blamed the migrant crisis for rising unemployment in the country after cutting the benchmark interest rate by 0.5 percentage point for the first time since the early days of Covid-19.
“If you're adding millions of people to the labor force — and you're creating 100,000 jobs — you're going to see unemployment rise,” Powell told reporters while responding to a question about the current monthly job creation in the country.
“So it really depends on what the trend is behind the instability of people coming into the country.”
“We understand there have been a significant number of people coming across borders, and that's actually what's causing the unemployment to rise,” he said, according to the Wall Street Journal.
“And the other thing is that hiring rates are slowing, which we monitor carefully. So it depends on what's happening on the supply side.”
Powell's comments come after the Fed accelerated plans to cut interest rates – originally thought to be just 0.25 percentage points – in recent months due to concerns about rising unemployment and slowing growth.
The unemployment rate has been rising steadily over the past year, with particular spikes in the spring, according to data from the U.S. Labor Department.
After starting the year at 3.7%, it reached 4.2% in August.
The pace of U.S. job growth has also slowed in recent months, with 142,000 jobs added in August, about 20,000 less than expected.
And only 89,000 cases were added in July — the lowest in the US since the pandemic began.
The labour market assessment suffered a major setback in August when it revealed that 818,000 fewer jobs would be created between March 2023 and 2024 than previously estimated.
More than 9 million people have been caught crossing the border into the US since Biden took office in 2021 — that's not including more than a million who are believed to have entered without being caught.
These immigrants have infiltrated the country's major cities as well as small towns and have filled many positions that were otherwise filled by blue-collar workers.
The Fed's decision to cut rates means that the Board of Governors believes unemployment now poses a greater risk to the economy than inflation
