Elizabeth Warren urges Fed to cut rates by 75 basis points
Senator Elizabeth Warren is urging the Federal Reserve to make a significant interest rate cut this week, arguing that current high borrowing costs have been detrimental to the U.S. economy.
In a letter to Fed Chair Jerome Powell, Warren, along with Senators John Hickenlooper and Sheldon Whitehouse, called for a 75-basis-point cut.
This request comes as traders expect a smaller rate reduction of 0.25% or 0.5% when the Fed meets on Wednesday.
"Now is the time to swiftly move forward with rate cuts," Warren wrote in her letter to Powell.
The senators cited the recent uptick in unemployment to 4.2% and a downward revision of March job numbers by 818,000 as signs that the labor market is softening.
“While the economy remains strong overall, this softening of the labor market offers further justification for lowering rates,” they added, emphasising the need to avoid a potential economic crisis.
Traders have been closely watching these developments, with Bitcoin's (CRYPTO:BTC) price rising to near $60,000 as speculation builds around a significant rate cut.
A 50-basis-point reduction is now seen as a 57% possibility, up from 25% a month ago, according to the CME Group’s FedWatch Tool.
While rate cuts are generally bullish for assets like Bitcoin and stocks, Warren argues that an aggressive cut is necessary due to the "deteriorating health" of the labor market and cooling inflation.
Despite some pushback, with the market initially leaning towards a cautious 25-basis-point cut, the idea of a larger cut has gained traction.
Wharton Professor Jeremy Siegal recently called for immediate rate cuts, believing markets would “rip” higher with such a move.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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