Democratic Senator Elizabeth Warren slammed the Federal Reserve for its poor response to curb skyrocketing inflation that has burdened every American.
Warren believes the Fed will destroy the US economy if it continues increasing the interest rate.
She was responding to the controversial remarks of the Fed Chair Jerome Powell, who asked Americans to get ready to bear the “pain” of unemployment amid the next interest rate hike.
Democratic Senator Slams Key Plan of the Biden Administration
Speaking on CNN’s State of Union, Warren stated the Fed’s attempt to increase the interest rate is highly likely to push the country into recession. According to Warren, multiple factors are responsible for the rising inflation in the United States.
Included in these factors are the COVID-enforced lockdowns that are still hurting parts of the economy, not to mention the world is still grappling with the supply chain crisis.
#Economy Senator Warren worries that Fed will tip U.S. economy into recession: U.S. Senator Elizabeth Warren (D-MA) gestures as Federal Reserve Chair Jerome Powell testifies before a Senate Banking, Housing, and Urban Affairs Committee hearing on the… https://t.co/IImac7cOXI
— Stratford Management Tokyo, Japan (@stratfordmanag2) August 29, 2022
Likewise, Warren continued, the Russia-Ukraine war and price gouging by big corporations are intensifying inflation in the country.
So, Warren claimed the Fed’s actions are not considering any of these factors to craft its anti-inflation strategy. Instead, the Fed is burdening the economy further, which will result in mass unemployment.
Furthermore, the senator asserted the Fed’s actions would not tame inflation at all, while unemployment will keep on rising. This would leave people in a more miserable situation.
Fed Asks Americans to Get Ready For Tough Times
These comments of Warren came after the remarks of Fed Chair Jerome Powell, who told Americans the Fed’s upcoming decisions could inflict pain on American families.
Powell noted the Fed is ready to aggressively use all the tools available at its disposal, which could be painful for both businesses and families.
Warren is a firm critic of Powell, as she was one of the six Democratic senators who voted against his nomination as the chair of the Federal Reserve earlier this year.
Powell this week said that the Fed will "bring pain on households to bring down inflation"
Recall that for every 1% increase in the jobless rate, around 40k Americans will die.
"Some of you will have to die, but that's a sacrifice we're willing to make"https://t.co/0wbafWhyUf
— Peruvian Bull (@peruvian_bull) August 27, 2022
Previously, Warren called Powell a “dangerous man,” adding he is pushing the American banking sector to the brink of seizure.
In addition to that, Warren claimed even Powell acknowledged so many external factors are responsible for current inflation. This means the role of the interest rate hike to tame inflation is highly overrated in the current economic setup.
Right after Powell’s speech, the stock market plummeted, as the Dow Jones Industrial Average dropped by more than 500 points.
Powell claimed the Central Bank is aiming to decrease the Consumer Price Index by up to 2%, which recently reached a historical value of 8.5%.
Economic experts suggest if the Fed takes aggressive measures to tame inflation to such an extent, it will chronically reduce economic activity in the country.
The Fed is planning for another interest rate hike at a time when the Biden administration is claiming inflation already reached its peak.
Therefore, Americans will see lower prices in the upcoming months.