WASHINGTON — Sen. Elizabeth Warren said Sunday that she was very concerned that the Federal Reserve would push the nation’s economy into a recession and that interest rate hikes would put people out of work.
“You know what’s worse than high prices and a strong economy? It’s high prices and millions of people out of work. I’m very concerned that the Federal Reserve will drive this economy into a recession,” Warren, a Democrat from Massachusetts, told CNN on Sunday.
US central bank chief Jerome Powell warned on Friday that Americans were heading into a painful period of sluggish economic growth and possibly rising unemployment as the Federal Reserve raises interest rates to combat the high inflation.
Powell said in a speech on Friday that the Fed will raise rates as much as necessary and keep them there “for some time” to reduce inflation that is tripling the Fed’s 2% target.
“While higher interest rates, slower growth and softer labor market conditions will reduce inflation, they will also bring some pain to households and businesses. These are the unfortunate costs of reducing inflation. But failure to restore price stability would mean much greater pain,” Powell had said in his speech.
“What he calls ‘some pain’ means putting people out of work, closing small businesses because the cost of money goes up because interest rates go up,” said Warren, whose views on the economy tend to sway progressive Democrats.
Warren said inflation was high in part due to supply chain issues, the Covid-19 pandemic and the war between Russia and Ukraine.
“There is nothing in raising interest rates, nothing in Jerome Powell’s tool bag, that directly addresses that and he has admitted that in congressional hearings,” Warren said.