A growing collection of congressional Democrats is calling on the Federal Reserve to pause its steady march of interest rate increases, warning the central bank is risking “engineering a recession that destroys jobs and crushes small businesses.”
Those lawmakers include prominent progressives like Senator Elizabeth Warren of Massachusetts, Senator Bernie Sanders of Vermont and Representative Pramila Jayapal of Washington, along with Senator Sheldon Whitehouse of Rhode Island, the chairman of the budget committee. They contend the Fed’s actions pose a particular risk to lower-paid workers, Black workers and others who are historically most likely to face job loss and financial pain if recession hits.
“While we do not question the Fed’s policy independence, we believe that continuing to raise interest rates would be an abandonment of the Fed’s dual mandate to achieve both maximum employment and price stability and show little regard for the small businesses and working families that will get caught in the wreckage,” the lawmakers wrote in a letter to Fed officials ahead of their meeting this week.
Progressive groups and lawmakers like Ms. Warren have urged the Fed to pause rate increases for months, saying they are the wrong tool to fight high inflation, which is moderating but remains above recent historical levels. Their calls have mounted as storm clouds gathered over the financial system, including the failures of three large regional banks in the past two months.
Notably, though, President Biden and his aides have not joined those calls, even as he begins a re-election campaign that could be heavily affected by the state of the economy. Administration officials continue to tread carefully on interest rates and other Fed policy questions, saying they are respecting Fed independence.
“We are very, very careful in speaking about the Fed and their policies and how they move forward,” Karine Jean-Pierre, the White House press secretary, told reporters on Monday.
Jerome H. Powell, the Fed chairman, has implicitly pushed back against liberals’ critiques of Fed rate increases in recent months, citing the harm inflation inflicts on economically vulnerable Americans.
“My colleagues and I are acutely aware that high inflation imposes significant hardship, as it erodes purchasing power, especially for those least able to meet the higher costs of essentials like food, housing and transportation,” Mr. Powell said in a news conference in March.
