Two Democratic senators, Elizabeth Warren from Massachusetts and Jacky Rosen from Nevada, have reached out to Federal Reserve Chair Jerome Powell, urging him to lower interest rates in order to prevent an economic downturn.
In their letter to Powell, the senators argue that the current high interest rates are hindering economic growth and causing an increase in housing and insurance costs, which they believe are the main factors contributing to the current inflation rate.
They point out that housing costs, a significant part of the Consumer Price Index (CPI), have been driven up by high interest rates, leading to higher rental prices, mortgage rates, and construction costs. This, in turn, has limited the availability of housing and kept prices elevated.
Additionally, Warren and Rosen highlight that auto insurance premiums have also risen due to a shortage of mechanics, an increase in severe car accidents, damage from climate change, and the complexity of modern cars that are more expensive to repair. They emphasize that these factors are not alleviated by high interest rates and may have even led insurers to raise premiums.
The Federal Reserve is set to make a decision on the Federal Funds Rate at the upcoming Federal Open Market Committee (FOMC) meeting on June 12th. Analysts are predicting that the central bank will maintain the current interest rates.
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