In an unexpected twist, U.S. Senator Elizabeth Warren (D-MA), known for her strong stance against cryptocurrency, is now appealing to the Federal Reserve to lower interest rates—a move that could ironically benefit the very crypto markets she has long tried to constrain.
Senator Warren’s Surprising Call for Rate Cuts
On Thursday, Warren urged the Federal Reserve to reduce its interest rate target, currently at 5.5%, arguing that it is making life difficult for Americans trying to pay rent. This request places her in an amusingly contradictory position with crypto investors, whose industry she has consistently targeted with strict regulations.
In a letter to Fed Chairman Jerome Powell, Warren and Senator Jacky Rosen (D-NV) claimed that the high interest rates are “already slowing the economy” while paradoxically increasing inflation, which has remained stubbornly above 3% for months.
🚨🇺🇸SEN. WARREN TELLS FED TO CUT RATES
In a letter to Federal Reserve Chairman Jerome Powell, Warren accused him of threatening the economy and increasing financial hardship for families in the U.S due to his refusal to lower interest rates.
“The Fed’s decision to keep interest… pic.twitter.com/kb4qV1Qx6P
— Mario Nawfal (@MarioNawfal) June 11, 2024
“It is driving up housing and auto insurance costs, the main drivers of overall inflation,” they wrote, referencing a May 31 report from Bankcreek Capital Advisors. “Reducing rates will lower the cost of renting, buying, and building housing, easing Americans’ single highest monthly expense.”
An Ironic Global Alignment
Interestingly, Warren’s plea aligns with recent actions by central banks in Canada and the European Union, both of which have reduced interest rates for the first time in years. The senators noted that countries like Sweden, Switzerland, Hungary, and the Czech Republic have also cut rates.
The letter concluded with a grim warning that the Fed’s current policy might trigger a recession and cost thousands of jobs. “You have kept interest rates too high for too long. It is time to cut rates,” the letter declared.
The Market’s Take
The Fed’s next interest rate decision, due Tuesday, comes after the May CPI inflation report. Despite Warren’s appeal, the Fed has signaled that interest rates will remain high for the foreseeable future. “The Committee does not expect it will be appropriate to reduce the target range until it has greater confidence that inflation is moving sustainably toward 2 percent,” the Fed stated after its May meeting.
With job growth strong and unemployment low, there is potential for rates to stay elevated. Market predictions, however, suggest a 99% likelihood that the Fed will keep rates steady at its June meeting, with possible cuts starting in September or November.
Meanwhile, Bitcoin enthusiasts see the writing on the wall, expecting lower rates to boost crypto prices. BitMEX co-founder Arthur Hayes recently encouraged investors to “go long Bitcoin and subsequently shitcoins,” anticipating central bank policy shifts.
Conclusion
Elizabeth Warren’s latest move to lower interest rates is a fascinating, if ironic, development given her history with cryptocurrency. Her newfound alignment with crypto investors could create unexpected allies in her fight against high living costs, even as it benefits the crypto markets she has long sought to regulate.
