Democrat Senators Urge Federal Reserve To Cut Interest Rates As Bitcoin Rally Stalls

Three Democratic senators have called on the Federal Reserve to lower the federal funds rate, which currently stands at a two-decade high of 5.5%.

What Happened: In a letter addressed to Fed Chairman Jerome Powell, Senators Elizabeth Warren (D-Mass.), Jacky Rosen (D-Nev.), and John Hickenlooper (D-Colo.) emphasized the need for an interest rate cut to prevent further economic slowdown and address inflation more effectively.

“We write today to urge the Federal Reserve (the Fed) to cut the federal funds rate from its current, two-decade-high of 5.5 percent. This sustained period of high interest rates is already slowing the economy and is failing to address the remaining key drivers of inflation,” the senators stated, as reported by the HuffPost.

The senators’ plea comes amidst financial markets adjusting their expectations for an interest rate cut, delaying the anticipated reduction from July to September due to the robust labor market.

This shift has also impacted the rally of Bitcoin BTC/USD, causing a temporary stall.

The high interest rates, aimed at curbing inflation, are argued to exacerbate costs in housing, construction, and auto insurance.

The senators warned that these increased costs could potentially push the economy into a recession, risking the jobs of thousands of American workers.

JPMorgan analysts have also noted that higher interest rates are contributing to rising rent costs.

Also Read: Crypto Adoption Is Coming ‘Slow And Steady,’ Research Report Says

The senators suggested that the Fed should consider moving away from its 2% inflation target, following the example of the European Central Bank (ECB) and the Bank of Canada, both of which recently reduced their rates.

The letter pointed out that the Fed’s “higher-for-longer” approach could lead to a stronger dollar and tighter financial conditions, which often result in an economic slowdown.

Contrary to this stance, Singapore-based crypto trading firm QCP Capital sees the current drop in Bitcoin and Ethereum ETH/USD prices as an opportunity for investors.

The firm does not expect the divergence in monetary policy between the Fed and other central banks to last long.

What’s Next: As the financial world keeps a close watch on these developments, industry experts will convene at Benzinga’s Future of Digital Assets event on Nov. 19 to discuss the implications of these economic policies on the digital assets market.

This event will be crucial for understanding how regulatory and monetary policy changes might shape the future of cryptocurrencies.

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