Jerome Powell Puts Biden At Odds With Democrats

© Getty Senator Elizabeth Warren, main photo, has been highly critical of Jerome Powell’s continued interest rate hikes.

Federal Reserve Chair Jerome Powell’s recent interest rate hike is pitting President Joe Biden against members of his own political party.

Powell’s been raising interest rates for a year in the hopes of fighting inflation. He was originally expected to hike rates by 50 basis points after sounding the alarm on the rising cost of living just last month. However, the sharp rate rises of the past year were partially to blame for the collapse of Silicon Valley Bank (SVB), and there were concerns that another rate hike could further harm banks holding long-dated Treasury bonds that had sunk in value as rates soared. Market watchers claim a 25 basis point rise shows Powell is trying to both fight inflation and avoid prolonging the banking crisis.

Bank Crises Will ‘Absolutely Not’ Stop Fed From Hiking Rates If Necessary

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Powell previously stated that the U.S. banking system was sound and resilient, and White House Press Secretary Karine Jean-Pierre reiterated the statement during a press briefing following the interest rate hike on Wednesday.

Jean-Pierre touted Biden for building a strong economy with a jobs report that showed 300,000 new jobs last month.

“We do not see a recession or pre-recession,” she said. “We see a strong economy.”

However, other members of the Democrat party disagree. Senator Elizabeth Warren has remained outspoken about the interest rate hikes and warned that further interest rate hikes could harm the American economy.

“The Fed under Chair Powell made a mistake not pausing its extreme interest rate hikes,” Warren tweeted Wednesday. “I’ve warned for months that the Fed’s current path risks throwing millions of Americans out of work. We have many tools to fight inflation without pushing the economy off a cliff.”

Warren has doubted the impact of inflation rate hikes for months and has often criticized Powell’s actions. Since March 2022, the Fed has hiked interest rates nine consecutive times, leading to a current target interest rate range of 4.75 to 5 percent. The rate increase could influence the cost of loans for cars, mortgages and credit card APR.

Warren isn’t the only legislator doubting the Fed’s decision to continue with rate hikes. Other signs in the economy, such as several bank failures, have signaled economic turmoil. Representative Ayanna Pressley, who serves on the House Financial Services Committee, told Politico that further interest rate hikes will threaten jobs.

“On his watch, we have seen a series of bank failures, deregulatory measures, and reckless interest rate hikes that have all threatened to undermine our economic recovery and make our financial system less safe,” Pressley said. “He has so far refused to pause interest rate hikes despite the risk of millions of job losses and the disparate impact they would have on our most vulnerable.”

The Federal Reserve told Newsweek in a statement that it would continue to monitor labor market conditions and inflation as it considers interest rate hikes in the future.

“The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals,” the statement said.

Senator Chuck Schumer previously supported the Fed’s decision and said the SVB failure is evidence that the nation’s banking system needs a “stronger regulatory regime”, according to a tweet by The Hill staff writer Alexander Bolton.

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