“ ‘I’m very worried that the Fed is going to tip this economy into recession.’ ”
— Sen. Elizabeth Warren, Democrat of Massachusetts.
Sen. Elizabeth Warren criticized Federal Reserve Chairman Jerome Powell’s Friday speech in Jackson Hole, Wyo., telling CNN Sunday that she is worried that the central banker’s planned interest rate hikes will cause unnecessary economic suffering for average Americans.
Powell said Friday that the Fed’s efforts to fight inflation will require the U.S. economy to grow slower that its potential, leading to “some pain” for households and businesses.
Read more: What happens next now that Jackson Hole is over? More Fed hawkishness is in the cards
“What he calls some pain means putting people out of work, shutting down small businesses, because the cost of money goes up because the interest rates go up,” Warren, a Massachusetts Democrat, said in an interview with CNN’s State of the Union.
“I am very worried about this, because the causes of inflation, things like the fact that COVID is still shutting down parts of the economy around the world, that we still have supply chain kinks, that we still have a war going on in Ukraine that drives up the cost of energy, and that we still have these giant corporations that are engaging in price gouging, there is nothing in raising the interest rates, nothing in Jerome Powell’s tool bag that deals directly with those,” Warren added.
Warren said that Powell’s rate hikes could lead to a situation where the U.S. experiences both high prices and a weak economy, rather than high prices and a strong economy.
“I’m very worried that the Fed is going to tip this economy into recession,” Warren added.
The Federal Reserve has raised short term interest rates from near zero earlier this year to a range of between 2.25% and 2.5% after a meeting of the board last month.
Powell’s speech kept open another unusual 0.75 percentage point increase at next month’s meeting of the Fed’s interest rate-setting committee as the central bank aims to fight rising prices.
Read: Fed’s Powell says bringing down inflation will cause pain to households and businesses in Jackson Hole speech
U.S. stocks have been under pressure since Powell’s speech. The S&P 500
and Dow Jones Industrial Average
each shed more than 3% during trade Friday and continued those losses Monday.