“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,” Warren told CNN’s Dana Bash on “State of the Union.”
“There is nothing in raising the interest rates, nothing in Jerome Powell’s tool bag, that deals directly with those, and he has admitted as much in congressional hearings when I’ve asked him about it,” the senator continued, adding: “Do you know what’s worse than high prices and a strong economy? It’s high prices and millions of people out of work.”
“I’m very worried that the Fed is going to tip this economy into recession,” said Warren, who earlier this year opposed Powell’s renomination to lead the Fed.
“While higher interest rates, slower growth, and softer labor market conditions will bring down inflation, they will also bring some pain to households and businesses,” he said.
Like Warren, Wall Street also reacted negatively to the tone of Powell’s speech, with the major indices dropping on the prospect of a sustained period of higher interest rates and the associated economic pain — a word Powell invoked twice in his brief speech, referencing slower growth, higher unemployment and financial strain that tighter policy will inevitably visit on American homes and businesses.
“You know what’s worse than high inflation and low unemployment? It’s high inflation with a recession and millions of people out of work,” she told Powell. “I hope you consider that before you drive this economy off a cliff.”