Following the release of a weak jobs report on Friday, Senator Elizabeth Warren (D-Mass.) has intensified her criticism of Federal Reserve Chair Jerome Powell, calling for an immediate cut in interest rates.
The report from the Bureau of Labor Statistics revealed an unexpected rise in the US unemployment rate from 4.1% to 4.3% between June and July, along with a slowdown in hiring to 114,000 jobs, falling short of the anticipated 176,000.
Warren, a member of the Senate Banking Committee, took to social media to express her concerns. She stated that Powell “made a serious mistake not cutting rates” and warned that “the jobs data is flashing red.” The senator urged Powell to “cancel his summer vacation and cut rates now — not wait 6 weeks.”
Warren has previously criticized the Fed’s interest rate hikes, which have occurred 11 times since March 2022, bringing the current rate to a 23-year high of 5.3%. Warren has consistently argued that these rate increases would lead to job losses for American workers.
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The weak jobs report has fueled fears that the Federal Reserve may have already waited too long to lower interest rates. However, some economists and Fed officials, including Chicago Fed president Austan Goolsbee, caution against overreacting to a single month’s data.
While some major Wall Street banks have adjusted their predictions to include a potential half-point rate cut in September, many economists believe such a significant move could be perceived as panic. Richmond Fed president Thomas Barkin suggested that more substantial reductions would typically be associated with a rapidly deteriorating economy, and noted that the 114,000 new jobs that were added while less than the months before, was still a “reasonable number.”
Powell, speaking at a press conference on Wednesday, said that while rate cuts are being considered, the committee is not currently contemplating a half-point cut. The Fed’s next meeting is scheduled for September 17-18.
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