Two US senators are calling on Federal Reserve Chair Jerome Powell to lower interest rates in order to prevent an economic downturn.

In a fresh correspondence addressed directly to Powell, Democratic senators Elizabeth Warren (D-Massachusetts) and Jacky Rosen (D-Nevada) contend that sustained high interest rates are hindering economic growth and causing a surge in housing and insurance costs, which they claim are the primary factors contributing to the current inflation rate.

“Rising housing costs play a significant role in the Consumer Price Index (CPI), and elevated interest rates are driving up, rather than reducing, housing expenses. High interest rates have led to increases in rental prices, mortgages, and construction expenses, constraining the housing supply and maintaining high prices,” they wrote.

Mark Zandi, the chief economist at Moody’s Analytics, pointed out that if the cost of renting single-family homes is excluded from the Fed’s preferred price gauge, inflation is already below 2%.

Warren and Rosen also argued that auto insurance premiums have climbed due to a scarcity of mechanics, more frequent and severe car accidents, damage related to climate change, and the complexity of modern cars that are costly to repair.

“None of these factors are alleviated by high interest rates. In fact, the Federal Reserve’s rapid interest rate hikes in 2022 may have had the opposite effect, prompting insurers to raise premiums,” they added.

The Fed is scheduled to release its next statement on the Federal Funds Rate during the Federal Open Market Committee (FOMC) meeting on June 12th. Analysts anticipate that the central bank will maintain the current interest rates.

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