Senator Warren concerned about Fed plans to raise interest rates

Democratic Sen. Elizabeth Warren said Sunday that she was concerned about the Federal Reserve’s plans to raise interest rates, which she said could plunge the economy into recession and lead to job losses.

“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 Fed is going to stimulate the economy into recession,” Warren told CNN on Sunday.

Fed Chairman Jerome Powell warned Friday that Americans face a painful period of slow economic growth and possibly rising unemployment as the Federal Reserve raises interest rates to combat high inflation.

Powell said the Fed will raise rates as much as necessary and will hold them at that level “for some time” in order to reduce inflation, which is more than three times the Fed’s 2 percent target.

“While higher interest rates, slower growth and easing labor market conditions will bring inflation down, they will also bring some pain to households and businesses. These are the unfortunate costs of lower inflation. But failure to restore price stability will mean a lot more pain,” the Fed chief said.

“What he calls ‘some pain’ means putting people out of work, shutting down small businesses because the cost of money goes up because interest rates go up,” said Warren, whose views on the economy are often influential among progressive Democrats.

Warren said inflation has been high in part because of supply problems, the COVID-19 pandemic and the war unleashed by Russia in Ukraine.

“There’s nothing in raising interest rates that directly addresses those problems, and he acknowledged that at the congressional hearing,” Warren recalled.