Warren steps up criticism of Powell following rate hike, says he is ‘dangerous’ to serve as Fed chair
Sen. Elizabeth Warren (D-Mass.) stepped up her criticism of Federal Reserve Chairman Jerome Powell following the Fed’s most recent interest rate hike Wednesday, saying that he is a “dangerous man” to serve in his role.
Warren told CNN’s Jake Tapper in an interview that Powell is doing a “terrible job” in his position and is risking sending the economy into a recession with the Fed’s continuous interest rate increases.
“I think he’s a dangerous man to have in this job,” she said.
Warren’s denunciation of Powell came after the Fed announced earlier in the day that it is raising interest rates for the ninth consecutive time, ticking the baseline range up 0.25 points to a range of 4.75 to 5 percent.
The raises have been part of the Fed’s plan to get inflation under control and drive it back under the target of 2 percent. The annual inflation rate dropped from 6.4 percent in January to 6 percent last month, continuing a downward trend from the peak of 9.1 percent but still much higher than the goal.
Powell has said he is willing to take necessary steps to reduce inflation even if it causes an economic downturn, and the Fed has been aggressive in combatting it, raising interest rates by 0.75 points four times in a row last year.
The economy has shown some resilience in continuing to add hundreds of thousands of new jobs, but the recent collapse of Silicon Valley Bank and Signature Bank has rattled the market, causing some economic experts to expect the Fed might hold at the current interest rate.
Warren said Powell has spent the five years he has served in his position weakening regulations for the large banks like Silicon Valley and Signature.
“I predicted five years ago, the consequence of that kind of weakening would be that we would see these banks load up on risk, look for short-term profits, give themselves the ginormous bonuses and big salaries, and then some of those banks will explode, and that is exactly what has happened on Chair Powell’s watch,” Warren said.
Silicon Valley Bank collapsed after the bank did not have enough cash on hand to fulfill withdrawal requests and needed to sell assets to increase its liquidity. That led to a bank run after customers learned about the situation.
Warren said Powell is “trying to drive” the economy into a recession with the interest rate hikes and raise the unemployment by more than 1 percentage point in a 12-month period.
The unemployment rate rose from 3.4 percent to 3.6 percent last month despite job growth, and the Fed’s projected unemployment rate for this year was set at 4.5 percent following Wednesday’s interest rate increase.
Warren said the unemployment rate has risen by at least 1 point in that time period 12 times, and every time it has resulted in a recession.
“So that’s the direction he’s trying to push us. That is a danger to our economy,” she said.
Warren has previously issued harsh criticism on Powell in his role as Fed chair, arguing that he has failed on both monetary policy and regulation. She called for a pause on interest rate increases on Sunday ahead of the Fed’s Wednesday decision.
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