The daily business briefing: June 16, 2022

The Fed aggressively hikes interest rates to fight inflation, Biden urges oil companies to produce more gas and cut profits, and more

Jerome Powell
(Image credit: Eric Baradat/AFP via Getty Images)

1. Fed hikes interest rates sharply to fight inflation

The Federal Reserve on Wednesday announced that it will raise short-term interest rates by three-quarters of a percentage point — its largest interest rate hike in 28 years — as part of an intensifying effort to fight high inflation. The Fed, which just a month ago raised rates by a half-point for the first time in 22 years, also signaled that more hikes are coming. Wednesday's increase came as Russia's invasion of Ukraine continued to push up food and fuel costs, and inflation reached a 40-year high. "Given last Friday's very ugly inflation report, they are stepping hard on the brakes," said Mark Zandi, chief economist of Moody's Analytics.

Los Angeles Times Federal Reserve

2. Biden calls for oil companies to produce more gas, cut record profits

President Biden on Wednesday called for oil companies to produce more gasoline and dial back record profits to help bring down fuel prices, which have been soaring since Russia invaded Ukraine in February. The national average price for a gallon of regular gas climbed above $5 this week, adding to inflation concerns. Biden wrote in a letter to executives from Marathon Petroleum, Valero Energy, and Exxon Mobil that they were refining less gas to push up prices and increase their profits. "At a time of war, refinery profit margins well above normal being passed directly onto American families are not acceptable," Biden wrote, noting that gas prices were rising faster than oil prices. U.S. refiners say they are operating at near-peak capacity.

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3. Supreme Court limits lawsuits under California labor law

The Supreme Court sided with California businesses on Wednesday, imposing limits on a state labor law that lets some workers file private lawsuits to settle disputes, even if they had previously agreed to address conflicts through arbitration. The 8-1 ruling will allow Viking River Cruises to arbitrate a former sales representative's wage-theft claim, filed on behalf of workers in similar situations. The high court said the Federal Arbitration Act overrides the state's Private Attorneys General Act. The ruling will limit lawsuits under the California law but not block them altogether, according to the Los Angeles Times.

Los Angeles Times The Wall Street Journal

4. Retail sales fall for 1st time in 5 months

U.S. retail sales fell in May for the first time in five months as high inflation took a toll on shoppers, the Commerce Department reported Wednesday. The unexpected 0.3 percent drop was driven in large part by a sharp falloff in vehicle sales "due to high prices, low inventory, and rising interest rates on car loans," The Wall Street Journal reports. Spending at gas stations rose 4 percent due to soaring fuel prices, but consumers cut back on goods like furniture, electronics, and online purchases. The news fueled concerns about where the economy is headed, as strong consumer spending, boosted by stimulus programs, drove the recovery from the recession triggered when the coronavirus crisis hit in early 2020.

The Wall Street Journal Bloomberg

5. Stock futures drop after Wednesday's post-Fed gains

U.S. stock futures plunged early Thursday, putting Wall Street on track to give back Wednesday's big gains, which came after the Federal Reserve announced it was raising interest rates three-quarters of a percentage point to fight high inflation. Futures tied to the Dow Jones Industrial Average and the S&P 500 were down 1.7 percent and 2.2 percent, respectively, at 6:30 a.m. ET. Nasdaq futures were down 2.7 percent. Stocks closed sharply higher Wednesday after the Fed decision. Fed Chair Jerome Powell said the central bank would probably make another big rate hike in July. The Dow and the S&P 500 snapped five-day losing streaks, gaining 1 and 1.5 percent, respectively, on Wednesday. The tech-heavy Nasdaq rose 2.5 percent.


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Harold Maass

Harold Maass is a contributing editor at He has been writing for The Week since the 2001 launch of the U.S. print edition. Harold has worked for a variety of news outlets, including The Miami Herald, Fox News, and ABC News. For several years, he wrote a daily round-up of financial news for The Week and Yahoo Finance. He lives in North Carolina with his wife and two sons.