Manzullo: Latest Rate Hike Could Impede Small Business Access to Capital

WASHINGTON - Concerned that the latest rate increase could backfire, House Small Business Committee Chairman Don Manzullo (R-Ill.) criticized the move by the Federal Reserve Board. On March 28, the Fed raised interest rates on short term borrowing based partly and substantially on the high cost of energy, Manzullo said. "The Fed wrongly and incredibly believes that raising the consumer interest rate on gas charged at the pump will reduce the price of petroleum and discourage manufacturers from using energy at a time they need to ramp up production to recover," Manzullo said. Consumption of energy is not caused by cheap interest rates but by other factors such as increased world-wide demand, inability to meet need, and in some cases the possibility of gouging by energy companies and oil producing nations, Manzullo added. "A hike in interest rates increases the price of energy, hinders the ability of small businesses to secure the capital they need to grow and create jobs, and makes U.S. companies less competitive overseas at a time of record trade deficits," Manzullo said. "Raising interest rates to stem the price of energy is like raising telephone taxes to lower the price of gasoline. They have nothing to do with each other."