Sen. Elizabeth Warren on Tuesday accused Federal Reserve Chair Jerome Powell of unnecessarily risking large-scale layoffs and an economic recession by continuing to raise interest rates, a policy decision that the Massachusetts Democrat slammed as badly misguided and destructive.
During a Senate Banking Committee hearing, Warren asked Powell to address the roughly two million people in the U.S. who would be out of a job if the Fed's projected unemployment rate of 4.6% by the end of the year turned out to be accurate.
"What would you say to them?" Warren asked. "How would you explain your view that they need to lose their jobs?"
Insisting that a surge in job losses is "not an intended consequence" of the Fed's rate increases, Powell said he would "explain to people more broadly that inflation is extremely high, and it's hurting the working people of this country badly—all of them, not just 2 million of them."
Powell, who signaled during his opening statement at Tuesday's hearing that the Fed is prepared to return to larger rate hikes if they're deemed necessary, also told Warren that an unemployment rate of 4.5%—up from the current rate of 3.4%—"is well better than most of the time for the last 75 years."
The Fed chair's answers did not satisfy Warren, who said Powell appears to view throwing two million people out of work as "just part of the cost" of bringing inflation down.
Watch the exchange:
Echoing expert critics of the Fed's aggressive rate hikes, Warren expressed concern that the central bank won't be able to stop unemployment from rising beyond the projected 4.6% rate once it starts increasing.
"History suggests that the Fed has a terrible track record of containing modest increases in the unemployment rate," Warren said. "In 11 out of the 12 times that the unemployment rate increased by a full percentage point within one year, unemployment went on to rise another full percentage point on top of that."
"If that happens this time, we'd be looking at at least three and a half million people who would lose their jobs," the senator continued. "Chair Powell, you are gambling with people's lives. And there's a pile of data showing that price gouging, and supply chain kinks, and the war in Ukraine are driving up prices. You cling to the idea that there's only one solution: lay off millions of workers."