Sen. Elizabeth Warren (D-Mass.) reportedly expressed her disapproval of Federal Reserve Chair Jerome Powell for maintaining interest rates earlier this week following the release of a less positive than anticipated jobs report on Friday.
On Wednesday, the central bank decided to keep interest rates where they are, between 5.25 and 5.5 percent.
“Fed Chair Powell made a serious mistake not cutting interest rates. He’s been warned over and over again that waiting too long risks driving the economy into a ditch.” Warren stated in a post to X.
“The jobs data is flashing red. Powell needs to cancel his summer vacation and cut rates now — not wait 6 weeks.” she continued.
Powell stated that if inflation and the job market continue to decline, the Fed might start reducing rates as soon as September in a news conference that followed the announcement.
But the July jobs report suggested that the downturn may happen sooner than expected. According to Labor Department statistics, the United States added 114,000 jobs last month and the unemployment rate increased slightly to 4.3 percent.
Since last July, the Fed has maintained rates at a two-decade high. In an attempt to slow the rapidly rising inflation, which peaked in June 2022 at a 40-year high of 9.1 percent, it increased rates throughout 2022 and 2023.
Since then, inflation has decreased to 3%. But the Fed was hesitant to lower rates early this year due to a slew of hotter-than-expected inflation readings in the first quarter of 2024.
Even though there were more indications of cooling in the second quarter, the Fed’s rate-setting panel stated on Wednesday that before beginning to lower rates, it needed to have “greater confidence” that inflation is declining stably to its target of 2 percent.
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