Senator Warren Wants 0.75% Fed Cut, Crypto Rebound?
To protect the U.S. economy from a slump, Elizabeth Warren, Sheldon Whitehouse, and John Hickenlooper called for a 75-basis-point (bps) Fed rate drop on September 16. The legislators also stressed that a more aggressive strategy is needed to avoid a recession in a letter to Federal Reserve Chair Jerome Powell today. This might bolster cryptocurrencies and stock markets.
Senators Want 75 bps Fed Cut
âIf the Fed is too cautious in cutting rates, it would needlessly risk our economy heading towards a recession,â the senators wrote, Bloomberg reported. They advised the Federal Reserve to âconsider implementing rate cuts more aggressively upfront to mitigate potential risks to the labor market,â which has cooled. To avert economic decline, legislators highlighted the need to act immediately even if inflation is approaching the Fed's 2% objective.
Due to a weakening U.S. labor market and falling inflation, the central bank is preparing for its first rate decrease since 2020. The central bank has hinted at a rate drop, but the extent is unknown. Market investors expect a 25 bps or 50 bps Fed rate drop equally.
Senators want a larger 0.75% decrease. That magnitude drop, bigger than the average 0.25% adjustment, would change monetary policy. Letter highlights complicated political factors behind central bank decision-making.
Political factors
Many, including former President Donald Trump, feel the government should avoid large measures before the election. Trump has said the body âshouldnât adjust rates ahead of the election,â which some Republican opponents agree with.
Senators think the Federal Reserve should move now as the job market weakens and inflation eases. âEmployment numbers adjust slowly, so the Fed should front-load rate cuts to avoid sliding towards a potential crisis,â they said.
