Democratic U.S. Senator Elizabeth Warren said on Sunday that she was very worried that the Federal Reserve was going to tip the nation’s economy into recession and that interest rate hikes would put people out of work.
“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,” Warren told CNN on Sunday.
The U.S. central bank’s chief, Jerome Powell, warned on Friday that Americans were headed for a painful period of slow economic growth and possibly rising joblessness as the Federal Reserve raises interest rates to fight high inflation.
Powell said in a speech on Friday the Fed will raise rates as high as needed, and would keep them there “for some time” to bring down inflation that is running at more than three times the Fed’s 2% goal.
“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,” Powell had said in his speech.
“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 views on the economy are often influential among progressive Democrats.
Warren said inflation was high partly due to supply chain problems, the COVID-19 pandemic and the war between Russia and Ukraine.
“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,” Warren said.