Senator Elizabeth Warren (D-MA) said Sunday on CNBC’s “Squawk Box” that the Federal Reserve should not raise interest rates so aggressively because it could cause a recession.
Co-host Carl Quintanilla said, “They say don’t fight the Fed, but you seemed interesting in fighting the notion that rate hikes can help offset inflation. Why?”
Warren said, “I’m very concerned. We know that some of the causes of inflation are supply chain problems, COVID outbreaks that continue around the world, Vladimir Putin invading the Ukraine, monopolies or near-monopolies engaging in price gouging, and increases in the interest rate won’t fix any of those. Jerome Powell has actually admitted that in testimony before Congress, and yet he continues to drive forward with what so far having historically fast, aggressive, high-interest rate increases. So if it’s not going to help bring down a lot of the prices in our economy, what it can do is actually pitch this economy into a recession. So, I think that that’s something the fed should consider. I think they should moderate this aggressive attack.”
She added, “We are really talking about is the Fed is trying to sharply raise rates so that businesses will contract so that they will either cut hours for employees or lay employees off. That means a lot of pain imposed on people. Look, think about it this way, with the interest rate increases, if they can’t address a whole lot of the reasons that we have this inflation, but they can force a lot of people into layoffs and no income coming in, look at the brutal situation that puts people in. We continue to have high prices but also have high unemployment. At the same time, that is not the position that we want to be in. I think the problem we’ve got here is the Fed has only one tool in its toolbox, raising interest rates, so it’s using that tool very aggressively, whether that’s the medicine that fixes this problem or not. We need to attack inflation on multiple fronts.”
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