WASHINGTON—With the Federal Reserve’s Open Market Committee (FOMC) having adjourned its July meeting without any reduction in rates, a trio of Democratic senators, led by Elizabeth Warren of Massachusetts (D-MA) is calling on the Fed to move more quickly.
The senators have sent a letter to Federal Reserve Chairman Jay Powell that suggests avoiding a cut now means surrendering to calls from some Republicans to refrain from taking such an action before the elections in November.
“We are writing to urge you to follow the data” in cutting rates today,” states the letter, which is also signed by Sen. John Hickenlooper of Colorado and Sen. Sheldon Whitehouse of Rhode Island.
Senators Say Data is Clear
In the letter, the senators said the data make clear there is ample evidence a rate cut is merited, as there have been consecutive decreases in the Personal Consumption Expenditures index, which is the Fed’s preferred inflation gauge.
Moreover, the letter adds, “The one-two punch of rising unemployment and slowing wage growth risks erasing the post-pandemic economic gains.”
The FOMC is not scheduled to meet again until November, with some analysts expecting it will announce a reduction in rates following that meeting. Some Republicans, including Donald Trump, have suggested that doing so would be a political favor to Democrats.
Can’t Give In to ‘Bullying’
In response, the three Democratic senators said in their letters that not cutting in response to the economic data would “indicate that the Fed is giving in to bullying, and is putting political considerations ahead of its dual mandate to ‘promote maximum employment and stable prices.”