Hickenlooper has called on the Fed five times since October 2022 to maintain or cut interest rates while high rates undermine American families and small businesses
Senators: “We urge you to make monetary policy in the interest of the American public, not a particular political party.”
WASHINGTON – U.S. Senator John Hickenlooper, Elizabeth Warren, and Sheldon Whitehouse sent a letter to Federal Reserve Chair Jerome Powell urging a cut to interest rates at this week’s Federal Open Market Committee meeting and in advance of their September meeting. In the face of increased Republican pressure to politicize the Federal Reserve and its decisions, the economic data suggests that the federal funds rate should already be lower than it is now.
“As we wrote in June, the Fed’s high interest rates are not an effective tool to address the remaining significant drivers of inflation, such as automobile and housing costs–and high interest rates may actually be making these problems even worse,” wrote the senators.
The personal consumption expenditures (PEC) index, a key gauge for inflation, decreased for the third consecutive month in June, making a strong case for rate cuts. Additionally, while the labor market is healthy and inflation is declining, the unemployment rate increased from 3.6 percent to 4.1 percent over the last year and job openings are down 20 percent. The Wall Street Journal’s chief economics commentator argues that the unemployment rate increase may be indicative of a trend because when unemployment ticks upwards, “it tends to keep going up.” While wage growth remains strong, it has slowed in recent months, and surveys of companies’ pay plans indicate that it is likely to continue slowing into next year. Without rate cuts, the Fed risks erasing the country’s post-pandemic economic gains.
The senators continued: “Indeed, given that the data appears to clearly justify cutting rates, the failure to do so would indicate that the Fed is giving in to bullying, and is putting political considerations ahead of its dual mandate to ‘promote maximum employment and stable prices…’ Refusing to follow the economic data and succumbing to political threats would be a subversion of your mandate.”
This most recent letter comes after Hickenlooper called on the Fed multiple times to consider the negative impacts of its continued interest rate hikes on American families:
- In October 2022, Hickenlooper called on the Federal Reserve to pause rate hikes in a letter to Chair Powell
- In January 2023, Hickenlooper sent another letter to the Federal Reserve cautioning against another interest rate increase in the face of rising layoffs and reduced employment
- In January 2024, Hickenlooper and his colleagues sent a letter to Federal Reserve Chair Jerome Powell, calling on the Federal Reserve to cut interest rates and address the affordable housing crisis
- In June 2024, Hickenlooper and his colleagues sent a letter to Federal Reserve Chair Jerome Powell, urging the Fed to cut the federal interest rates that have increased housing and insurance costs for working families.
Full text of the letter is available HERE.
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