Key facts:
“Now is the time to move quickly with rate cuts,” politicians say.
Senators warn that delays in rate cuts have “threatened” the economy.
US Senators Elizabeth Warren, Sheldon Whitehouse and John Hickenlooper sent a letter to Federal Reserve Chairman Jerome Powell urging an immediate 75 basis point reduction in interest rates.
“Now is the time to move quickly with rate cuts,” They argue politicians, warning that delays in this action “have threatened” the economy
The request is based on the Fed’s confidence where inflation is approaching its 2% target. The senators note that, given this situation and data indicating slower job growth, “it is clear that the time has come for the Fed to cut interest rates.”
In fact, they warn that it may be “too late,” suggesting that the Fed has fallen “behind the curve.” Inflation has fallen to 2.5%, well below the 7% peak in mid-2022, and just above the Fed’s 2% target.
For months, lawmakers have urged the Fed to lower the federal funds rate. In their June letter, they mentioned that high interest rates “They are not successfully addressing the factors that still drive inflationincluding housing costs, and may even be getting worse.”
The Federal Open Market Committee (FOMC) “must cut rates by more than the 25 basis points that some Fed officials have already signaled,” they say. A 75 basis point cut would put the federal funds rate between 4.5-4.75%, still higher than at any point between November 2007 and January 2023, the policymakers suggest.
The senators also warn of the risk of a recession. “The Committee should consider implementing rate cuts more aggressively in advance to mitigate potential risks to the labor market,” they say.
The request from Warren, Whitehouse and Hickenlooper comes amid uncertainty over the monetary policy decision that the Fed will announce on Wednesday, September 18.
Economists have pointed out that a 25-point cut in interest rates will “toughen market conditions,” as reported by CriptoNoticias. In addition, BlackRock, one of the largest investment firms in the world, has suggested that the rate cut could be less than expectedanticipating only a 25 basis point adjustment.
However, market sentiment seems to diverge. Users on cryptocurrency platforms such as Polymarket believe that the interest rate cut will be larger than expected, reflecting an optimism that contrasts with the pessimism of some analysts.
This article was created using artificial intelligence and edited by a human on the editorial staff.
