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Senator Warren Calls On Fed To Cut Interest Rates By 0.75% At Next Meeting

Senator Warren Calls On Fed To Cut Interest Rates By 0.75% At Next Meeting
© Copyright Image: CryptoPotato

Bitcoin-skeptic Elizabeth Warren (D-Massachusetts) and other Democratic senators sent a letter to the Federal Reserve on Monday calling for far more aggressive rate cuts than the market expects.

We write today to urge the Federal Reserve (Fed) to cut the federal funds rate, currently at a two-decade-high of 5.3 percent, by 75 basis points (bps) at the Federal Open Market Committee (FOMC) meeting on September 17 and 18, 2024, the senators wrote.

Too Late To Cutting Rates

The letter follows Federal Reserve chairman Jerome Powells Jackson Hole speech in August, when he proclaimed that the time has come for the central bank to start cutting interest rates. While asserting that the upside risks to inflation have diminished, he acknowledged that the downside risks of unemployment were beginning to rear their head.

It also follows months of insistence from Senator Warren that the Fed should have cut interest rates earlier this year, in line with the Bank of Canada and the European Central Bank (ECB). At the time, she and Senator Jacky Rosen (D-Nevada) argued that high interest rates were ironically exacerbating inflation including housing and auto insurance costs.

While now conceding that inflation has nearly dropped to the Feds 2% target, Warren now claims it may be too late for the Fed to begin with modest rate hikes. She noted the Bureau of Labor Statistics latest markdown revealing that 818,000 fewer jobs were created in the 12 months ending March 2024 than were initially estimated meaning job growth has been much slower than the Fed thought.

If the Fed is too cautious in cutting rates, it would needlessly risk our economy heading towards a recession, the senators wrote. The Committee must consider implementing rate cuts more aggressively upfront to mitigate potential risks to the labor market.

What Will The Fed Do Next?

According to CME FedWatch, interest rate traders are pricing in a 67% chance of the Fed announcing a 50 basis point cut on Wednesday. On Friday, certain Fed policymakers said they were ready to kick off rate cuts, warning that the labor market could be in danger without a decisive next move.

By contrast, BlackRock warned on Monday that rate cuts wouldnt be so steep as the market expects. Bitcoins price dropped back below $58,000 in the aftermath.

The post Senator Warren Calls On Fed To Cut Interest Rates By 0.75% At Next Meeting appeared first on CryptoPotato.

Read more: https://cryptopotato.com/senator-warren-calls-on-fed-to-cut-interest-rates-by-0-75-at-next-meeting/

Text source: CryptoPotato

Disclaimer: Financial information and news are not financial advice, read the disclaimer.
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