🚨 Senator Warren supports bold rate cuts: Fed, 0.75% is not enough, we want more!
The market generally predicts that the Fed will cut interest rates by 0.5% next time, but Senator Warren doesn't think so. She believes that in order to save the labor market, the Fed must speed up its pace and cut interest rates by 0.75% to be strong enough!
Elizabeth Warren, along with several other Democratic senators, wrote a letter to the Federal Reserve urging them to take bold action at the September meeting and cut interest rates by 75 basis points in one go. The letter said that the current federal funds rate is 5.3%, the highest in 20 years, and it is time to loosen up.
The letter was sent after Fed Chairman Powell gave a speech in Jackson Hole in August. At that time, he said that the time had come for the central bank to start cutting interest rates, but Senator Warren has been saying for months that the Fed should keep pace with the Bank of Canada and the European Central Bank and cut interest rates earlier.
Warren pointed out that high interest rates actually exacerbate inflation, including housing and car insurance costs. Now, while inflation is close to the Fed's 2% target, she worries that it may be "too late" for the Fed to start modest rate hikes.
According to CME FedWatch data, traders expect a 66% chance of a 50 basis point rate cut on Wednesday. Some Fed policymakers have also said they are ready to start cutting rates, warning that the labor market could be in trouble if they don't act decisively.
On the other hand, BlackRock reminded everyone that the rate cut may not be as big as the market expects. As soon as the news came out, the price of Bitcoin fell back below $58,000.
👇 How much do you think the Fed should cut rates? Will the call from Senators such as Warren be a game changer? Tell me what you think in the comments!
