Three Democratic senators urged Federal Reserve Chair Jerome Powell and fellow policymakers to aggressively cut the central bank’s benchmark interest rate, including by 75 basis points this week, to protect the US economy from potential harm.
“If the Fed is too cautious in cutting rates, it would needlessly risk our economy heading towards a recession,” Sens. Elizabeth Warren, Sheldon Whitehouse and John Hickenlooper said in a letter sent Monday to Powell. “The Committee must consider implementing rate cuts more aggressively upfront to mitigate potential risks to the labor market.”
The letter highlights the thorny political backdrop surrounding the Fed as it prepares to lower interest rates for the first time since 2020 in a bid to bolster a softening jobs market. While officials have repeatedly maintained that policy decisions won’t be influenced by partisan considerations, they continue to face scrutiny from several political corners.
Those range from lawmakers who think the Fed is responding too tentatively, to former President Donald Trump who has said the Fed shouldn’t adjust rates ahead of the presidential election. His comments drew a critical response from Vice President Kamala Harris, his rival for the White House this fall, who said she would respect the Fed’s independence if elected.
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