The senator believes high interest rates are making it hard for Americans to pay rent.
United States Senator Elizabeth Warren (D-MA) is calling on the Federal Reserve to lower its interest rate target on Thursday – a move most analysts believe would be a boon for crypto markets.
The senator’s request puts her in an ironic alignment with crypto investors, whose industry she has repeatedly tried to stifle with burdensome legislation and reporting requirements.
Cut Interest Rates Now, Says Senator Warren
In a letter to Fed chairman Jerome Powell on Tuesday, Warren claimed that the central bank’s current 5.5% rate is “already slowing the economy” while counterintuitively exacerbating inflation, which has remained stubbornly above 3% for the past several months.
“It is driving up housing and auto insurance costs, which are currently the main drivers of the overall inflation rate,” the letter reads, co-signed by Warren and Senator Jacky Rosen (D-NV), citing a May 31 report from Bankcreek Capital Advisors. “Reducing rates will reduce the cost of renting, buying, and building housing, lowering Americans’ single highest monthly expense.”
Lowering rates would also put the United States in line with Canada and the European Union, both of whose central banks lowered interest rates last week for the first time in years. “Sweden, Switzerland, Hungary, and the Czech Republic have already cut rates,” the senators added.
In conclusion, the senators claimed that the Fed’s current policy may force a recession that pushes thousands of workers out of their jobs.
“You have kept interest rates too high for too long. It is time to cut rates,” the letter stated.
The Odds Of A Rate Hike
The Fed’s next interest rate decision is due on Tuesday, following the CPI inflation print for May earlier in the day. Thus far, the Fed has indicated that interest rates will stay ‘higher for longer.’
“The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent,” the Fed wrote following its last meeting in May.
It also claimed that job growth and unemployment remain low, potentially leaving room for higher rates.
According to CME FedWatch, the market is 99% sure that the Fed will keep rates flat at its June meeting, with a stronger likelihood of a cut beginning in September or November.
Nevertheless, Bitcoin bulls believe the trend is clear, and that lower rates are destined to arrive and deliver higher crypto price. In a post last week, BitMEX co-founder Arthur Hayes argued that it is now time to “go long Bitcoin and subsequently shitcoins,” in response to multiple central bank pivots.
Source: cryptopotato.com
