Three U.S. senators, including Elizabeth Warren, penned a letter to Federal Reserve Chair Jerome Powell, urging for a reduction in interest rates to counteract economic challenges.

They argue that high rates are stifling economic growth and exacerbating inflation in housing and auto insurance costs, which could lead to a recession and increased unemployment if left unchecked.

Highlighting concerns from economists and citing recent rate cuts by the European Central Bank and the Bank of Canada, the senators emphasise the need for immediate action to stabilise the economy.

They contend that lowering rates could alleviate housing-related inflation and support homeownership, particularly among young adults, while also reducing auto insurance premiums.

The senators stress that the Fed's current monetary policy is ineffective and call for rate cuts to protect American workers from further financial strain.