Senators Slam FED Chair, Demand Action on Interest Rates Amid Market Anxiety

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Following significant rate adjustments by leading central banks, including the European Central Bank’s recent trim from 4% to 3.75%, three influential U.S. Senators are taking action. Elizabeth Warren, Jacky Rosen, and John Hickenlooper have penned a compelling letter to Federal Reserve Chair Jerome Powell, urging a similar reduction in the federal funds’ interest rates to ease financial strains on working Americans.

Here’s what you must know.

Senators Call for Rate Cut

Since March 2022, the Federal Reserve has raised interest rates a staggering eleven times, reaching their highest levels in over two decades. However, this persistent upward trend has raised alarms across various sectors. Despite mounting calls for rate cuts, the Fed has stood firm, sparking worries about worsening economic strains.

Yesterday, the trio of Democratic senators penned a sharp letter criticizing the Federal Reserve’s prolonged adherence to high interest rates, currently at a two-decade peak of 5.5%. Their argument? These high rates are increasing economic challenges by driving up costs in sectors like housing, construction, and auto insurance.

They also warn of a looming recession and significant job losses if rates remain high.

Looking At the Global Scenario

The senators highlighted the actions of other central banks, such as the ECB and the Bank of Canada, which have recently cut rates. They suggest that the Fed should follow suit and reconsider its 2% inflation target. 

According to the letter, failing to align with these global trends could lead to a weakening dollar and tighter financial conditions, potentially slowing down economic growth. Even though, banking giant JPMorgan has also noted that higher interest rates are driving up rents in the U.S.

Impact on Cryptocurrency

The senators’ call for lower interest rates extends to the world of cryptocurrencies. A rate cut would likely reduce U.S. Treasury yields, making riskier assets like cryptocurrencies more appealing to investors.

Currently, Bitcoin is experiencing a correction phase, trading more than 7% lower than its all-time high of $73,700, now hovering at $67,300. This trend has also affected other cryptocurrencies such as Ethereum, Solana, and Cardano, which have seen substantial price drops.