Bitcoin-skeptic Senator Elizabeth Warren (D-Massachusetts) and other Democratic senators sent a letter to the Federal Reserve calling for more aggressive rate cuts.
Call for Rate Cuts
In the letter to the Fed, the senators urged a reduction of the federal funds rate, currently at 5.3%, by 75 basis points (bps) at the Federal Open Market Committee (FOMC) meeting on September 17 and 18, 2024.
Senators' Arguments
The letter follows Federal Reserve Chairman Jerome Powell’s Jackson Hole speech in which he stated that 'the time has come' for the central bank to start cutting interest rates. Senator Warren has been insisting on this need for several months, arguing that high interest rates are ironically exacerbating inflation, including housing and auto insurance costs.
Next Steps for the Fed
According to CME FedWatch, interest rate traders are pricing in a 67% chance of the Fed announcing a 50 basis point cut on Wednesday. However, BlackRock warns that rate cuts may not be as steep as the market expects.
Senator Warren and her colleagues continue to push for aggressive measures by the Fed to mitigate potential risks to the labor market and prevent a recession.
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