This follows news Federal Reserve is leaning toward rate cuts
Senator Elizabeth Warren and fellow Democratic senators have called on Federal Reserve chair Jerome Powell to take action in reducing interest rates as a means to alleviate the escalating costs of housing, according to a Bloomberg report.
In a letter penned on Jan. 28, the senators emphasized the impact of high interest rates on the nation’s enduring housing crisis, stressing the need for the Federal Reserve to reassess its interest rate policies, particularly those that have propelled housing beyond the financial reach of many.
Warren, a Democrat representing Massachusetts, along with John Hickenlooper of Colorado, Jacky Rosen of Nevada, and Sheldon Whitehouse of Rhode Island, collectively voiced their concerns regarding the adverse consequences of the Fed’s rate hikes, as reported by CNN.
Over the past two years, the Federal Reserve has raised interest rates to a range of 5.25% to 5.5%, marking a 22-year high, in a bid to cool rapid inflation. The policy resulted in the effective rate on a 30-year mortgage soaring above 8% last year, though it has declined from that peak in subsequent months, according to Bloomberg.
The quartet of senators contend that the escalation in mortgage rates has worsened the shortage of available housing, aggravating the crisis further. Additionally, they posit that elevated rates have pushed up rental costs, pressuring renters across the nation.
In these circumstances, the Federal Reserve tempered its pace of rate hikes in the preceding year and has refrained from implementing further increases since July. Powell and his colleagues have indicated leaning towards rate reductions as the next probable course of action, with market sentiments anticipating such adjustments will materialize as early as spring.
In projections released in December, Fed officials tentatively forecast three interest-rate cuts for the ensuing year. Policymakers are expected to maintain the status quo regarding interest rates during their meeting this week.
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