Elizabeth Warren, Bitcoin Critic, Calls on Fed Chair for Significant Rate Reduction

Senator Elizabeth Warren is urging the Federal Reserve to implement significant interest rate cuts, emphasizing the long-standing threat that high borrowing costs pose to the U.S. economy. In a letter to Fed Chair Jerome Powell co-signed by Senators John Hickenlooper and Sheldon Whitehouse, Warren called for swift action on rate cuts, advocating for a 75-basis-point reduction.

Traders are anticipating a rate cut decision by the U.S. central bank, with expectations ranging from a 0.25% to a 0.5% decrease from the current 23-year high benchmark rate. Bitcoin’s price saw an increase as traders analyzed articles from the Wall Street Journal and Financial Times hinting at a potential rate cut, with a 57% probability of a 50-basis-point drop according to the CME Group’s FedWatch Tool.

While rate cuts typically favor risk assets like stocks and crypto, Warren and others are pushing for a larger cut due to concerns about the weakening labor market. They argue that with inflation slowing down and recent job data revisions showing a decrease of 818,000 positions, it is crucial for the Fed to act swiftly to prevent a potential crisis.

The lawmakers highlighted the rise in the unemployment rate to 4.2% as a troubling sign for the U.S. economy, emphasizing the need for proactive rate cuts to prevent further economic strain. They warned against a cautious approach, citing Powell’s previous stance on not welcoming further cooling in labor market conditions.

Despite initial market expectations leaning towards a 25-basis-point cut, some experts have suggested a 75-basis-point reduction to address economic slowdown concerns. Warren’s advocacy for a significant rate cut aligns with the crypto industry’s call for more aggressive action by the Fed.

Warren, known for her skepticism towards crypto, has previously raised concerns about the industry’s impact on the financial system and national security. Her stance has garnered criticism from the crypto community, with a crypto lawyer vying for her Senate seat with support from Ripple Labs.

In the context of advocating for a substantial rate cut, Warren and the crypto industry find common ground in their shared interest in the Federal Reserve’s potential for robust rate reductions.