Democratic U.S. Senator Elizabeth Warren said on Sunday that she was very concerned that the Federal Reserve was going to steer the nation’s economy into recession and that interest rate raises would cause people to be jobless.
Warren told CNN on Sunday:
“Do you know what’s worse than high prices and a strong economy? It’s high prices and millions of people out of work. I am very worried that the Fed is going to tip this economy into recession.”
The U.S. central bank’s chief, Jerome Powell, cautioned on Friday that Americans were moving toward a painful period of weak economic growth and likely high unemployment as the Federal Reserve hikes interest rates to curb soaring inflation.
Powell said in a speech on Friday the Fed will hike rates as high as necessary and would keep them there “for some time” to tame inflation that is running at more than triple the Fed’s 2% target.
Powell had said in his speech:
“While higher interest rates, slower growth, and softer labor market conditions will bring down inflation, they will also bring some pain to households and businesses. These are the unfortunate costs of reducing inflation. But a failure to restore price stability would mean far greater pain.”
“What he calls ‘some pain’ means putting people out of work, shutting down small business because the cost of money goes up because the interest rates go up,” said Warren, whose sentiments on the economy are normally influential among progressive Democrats.
Warren said inflation was surging partly because of supply chain problems, the COVID-19 pandemic and the war conflict in Ukraine. She added:
“There is nothing in raising the interest rates, nothing in Jerome Powell’s tool bag, that deals directly with those and he has admitted as much in congressional hearings.”
