Hickenlooper sends his sixth letter to the Fed since October 2022 urging them to cut interest rates
Senators to Chair Powell: “If the Fed is too cautious in cutting rates, it would needlessly risk our economy heading towards a recession.”
WASHINGTON – Today, U.S. Senators John Hickenlooper, Elizabeth Warren, and Sheldon Whitehouse sent a letter to Federal Reserve (Fed) Chair Jerome Powell, urging the Fed to cut the federal interest rate to help lower costs for working families.
“The Fed’s elevated interest rates are not successfully addressing the remaining drivers of inflation, including housing costs—and might even be making them worse,” the senators wrote. “The Committee must consider implementing rate cuts more aggressively upfront to mitigate potential risks to the labor market.”
Economists have warned that the Fed risks weakening the economy by moving too slowly to cut interest rates and even Chair Powell acknowledged last month that “(t)he time has come for policy to adjust.”
Inflation has fallen to 2.5 percent, while the unemployment rate has risen to 4.2 percent, from 3.5 percent in July 2023. Employment numbers adjust slowly, so the Fed should front load rate cuts to avoid sliding towards a potential crisis.
Without larger rate cuts, the Fed risks further worsening labor market conditions. At the end of August 2024, the Bureau of Labor Statistics revealed that there were 818,000 fewer jobs created between March 2023 and March 2024 than initially estimated, showing that job growth has been slower than previously estimated.
The recommended rate cut of 75 basis-points would put the federal funds rate at 4.5 – 4.75 percent which is still higher than it was at any point between November 2007 and January 2023.
This most recent letter comes after Hickenlooper has called on the Fed multiple times to consider the negative impacts of its continued interest rate hikes on American families:
- In August 2024, Hickenlooper and his colleagues sent a letter to the Fed asking them to cut interest rates to stop undermining working class Americans.
- In June 2024, Hickenlooper and his colleagues sent a letter to the Fed, urging them to cut the federal interest rates that have increased housing and insurance costs for working families.
- In January 2024, Hickenlooper and his colleagues sent a letter to the Fed calling on them to cut interest rates and address the affordable housing crisis
- In January 2023, Hickenlooper sent a letter to the Fed cautioning against another interest rate increase in the face of rising layoffs and reduced employment
- In October 2022, Hickenlooper called on the Fed to pause rate hikes in a letter to Chair Powell
Full text of the letter is available HERE.
###