The central bank’s campaign against the #runaway #prices that pose perhaps the greatest threat to President Biden’s reelection has effectively been a two-front war
— and Fed Chair Jerome H. Powell commands only half the battlefield.
️Supply chains recovering from disruptions caused by covid and the war in Ukraine
have done more to lower inflation than higher interest rates have. 
Now the relative impact of #supply #side gains and #interest #rates will shape the Fed’s decision on
when, and by how much, to lower borrowing costs.
If the Fed waits too long to act, the economy could tumble into recession under pressure from borrowing costs.
On Thursday, first-time claims for unemployment benefits hit 242,000,
the highest level in 10 months,
a sign the labor market may be tightening.
Sens. Elizabeth Warren (D-Mass.), Jacky Rosen (D-Nev.) and John Hickenlooper (D-Colo.)
wrote to Powell last week
urging him to cut rates.
Higher borrowing costs are making inflation worse by discouraging new home construction amid a housing shortage, the lawmakers said.
“You have kept interest rates too high for too long: it is time to cut rates,” they wrote.
https://www.washingtonpost.com/business/2024/06/15/federal-reserve-interest-rates-inflation/