Senator John Hickenlooper of Colorado is urging the Federal Reserve to pause its relentless attack on inflation before it does more harm than good.
“High inflation needs an answer. But the concern is that the Fed is doing it too soon,” Hickenlooper wrote in a letter to Fed Chairman Jerome Powell on Thursday. “We should wait to see the effects on the economy and see how these changes are absorbed.”
The letter, first shared with CNN, is the latest effort by Senate Democrats to convince the central bank to stop holding back the economy. Hickenlooper noted that interest rate hikes are the Fed’s “hardest tool” and officials have already “used that hammer time and time again.”
“Raising rates when prices are falling would be foolish and harmful to American consumers and small businesses,” Hickenlooper wrote, adding that the Fed’s actions so far have “failed” to bring down inflation.
In an effort to keep inflation under control, the Fed has raised interest rates faster than at any time since the early 1980s under legendary Fed Chairman Paul Volcker. The central bank is expected to deliver a major rate hike next week.
Noting that the Fed’s policy is hitting the economy with a big lag, Hickenlooper says it would be “prudent” for the Fed to take a pulse and assess how these historic efforts to fight inflation are affecting the economy.
“I am writing to ask the Federal Reserve to pause and seriously consider the negative effects of raising interest rates again,” Hickenlooper wrote, adding that families have experienced rising home and auto borrowing costs.
The letter comes just days after Senate Banking Committee Chairman Sherrod Brown, a Democrat from Ohio, warned Powell against waging too much of a war on inflation. Brown’s caution is notable because Brown voted for Powell’s second term as Fed leader.
Hickenlooper acknowledged that reducing high inflation is “significant,” but stressed that some of the causes of rising prices — including Russia’s war in Ukraine — are beyond the Fed’s control.
The Colorado Democrat cited Nobel Prize-winning economist Joseph Stiglitz, who shares that concern.
“Will rising interest rates lead to more oil, oil prices, more food, lower food prices? The answer is clearly no. In fact, the real danger is that it will get worse,” Stiglitz, a professor at Columbia University, told CNBC last month.
Brown’s and Hickenlooper’s letters, along with sharper critics from progressives like Sen. Elizabeth Warren and Rep. Ro Khanna, underscore the growing level of concern in Washington that the Fed will plunge the economy into recession.
Of course, regardless of the Democrats’ letters to Powell, the Fed chairman has pledged to stay out of politics and base the central bank’s decisions solely on what’s happening in the economy. The White House has repeatedly stressed that it respects the Fed’s independence, a marked shift from the Trump administration.
Former President Donald Trump repeatedly criticized Powell – his handpicked Fed chairman – for raising interest rates and shrinking the Fed’s balance sheet. In 2019, Trump compared Powell to a “golfer who can’t putt” and suggested he is a “bigger enemy” than Chinese President Xi Jinping.
Powell “was strong enough not to get into a pissing match with Trump. He stood up to Trump in many ways,” David Rubenstein, the billionaire founder of the Carlyle Group, told CNN last fall.
If the economy stumbles in the coming months, Powell is likely to keep up the pressure, this time from his left.