- Three Democratic senators – Elizabeth Warren, Jacky Rosen, and John Hickenlooper – urged the Federal Reserve to cut interest rates at its meeting this week.
- They argued that high interest rates are contributing to higher prices for things like housing, auto insurance, and are threatening the health of the economy.
- The senators cited actions by other major central banks that have cut rates recently and said the Fed’s decision to keep rates high is widening the rate gap between the U.S. and Europe.
Three Democratic senators are urging the Federal Reserve to cut interest rates at its upcoming meeting this week. They argue that the current high rates are contributing to inflation rather than reducing it.
Senators Warn High Rates Are Raising Costs
In a letter sent to Fed Chairman Jerome Powell on Monday, Senators Elizabeth Warren, Jacky Rosen, and John Hickenlooper said waiting to cut rates would be a mistake. They cited actions by other major central banks that have started cutting rates or signaled they may do so soon.
The senators claim the Fed’s decision to keep rates high is widening the gap between rates in Europe and the US. This could boost the dollar and tighten financial conditions, they warned.
Link Between Rates And Insurance Costs
In addition, the senators argue high rates may be playing a role in rising insurance costs. They say factors like more frequent accidents and climate change are raising insurance premiums, not interest rates.
They suggest the Fed’s rapid rate hikes in 2022 may have backfired, prompting insurers to raise premiums after losing money on invested premiums.
Call To Cut Rates
“The Fed’s decision to keep interest rates high continues to widen the rate gap between Europe and the US,” the senators wrote. “In fact, the Fed’s rapid increase in interest rates in 2022 may have had the opposite of its desired effect.”
The trio concluded: “You have kept interest rates too high for too long, it is time to cut rates.”
The FOMC is set to meet Tuesday and Wednesday to discuss potential rate moves. Though a cut is not expected, the senators urge the Fed to take action at this week’s meeting.
