Two Democratic senators, Elizabeth Warren and Jacky Rosen, have urged Federal Reserve Chair Jerome Powell to cut interest rates. They argue that high rates are hurting the economy by:
Increasing Housing Costs
- Interest rates drive up rental prices, mortgage payments, and construction costs.
- This limits housing supply and keeps prices high.
Raising Auto Insurance Costs
- Insurance costs have increased due to a shortage of mechanics, more accidents, climate change damage, and complex cars.
- High interest rates have not helped to reduce these costs and may have even made them worse.
The senators believe that the Fed’s rapid interest rate increases in 2022 have had the opposite of their intended effect. They urge Powell to cut rates at the upcoming Federal Open Market Committee meeting on June 12th to prevent an economic recession.
