It's time for the Fed to cut interest rates and bring relief to Americans who 'cannot afford to pay rent,' Elizabeth Warren says

• Sen. Elizabeth Warren joined some of her colleagues in pushing for the Federal Reserve to cut interest rates.
• They cited the lack of housing affordability in the US, partly sparked by rate hikes.

As Americans grapple with high housing costs, a group of Democratic lawmakers is urging the Federal Reserve to implement relief as soon as possible.

On Monday, Sen. Elizabeth Warren joined three of her Democratic colleagues — John Hickenlooper, Jacky Rosen, and Sheldon Whitehouse — in sending a letter to Fed Chair Jerome Powell regarding the central bank's upcoming interest rate actions.

The Fed is expected to announce on Wednesday that it will continue its pause on interest-rate hikes as it continues to work toward its 2% inflation target for the US economy. Still, the Fed's December Summary of Economic Projections penciled in three interest-rate cuts for 2024, and the Democrats urged Powell to consider putting those cuts into action sooner rather than later.

"Interest rates are still too high for many American families, who already cannot afford to pay rent or buy their first homes," the lawmakers wrote. "As the Fed weighs its next steps in the new year, we urge you to consider the effects of your interest rate decisions on the housing market and to reverse the troubling rate hikes that have put affordable housing out of reach for too many."

The lawmakers wrote that the Fed's aggressive interest-rate hikes during the pandemic have kept mortgage costs high. While rent costs have decreased slightly over the past few months, "high interest rates mean higher mortgage rates for landlords, who may pass off these costs in the form of rent hikes for their tenants," the Democrats wrote.

As Business Insider previously reported, cheap rents are becoming increasingly hard to come by. A recent report from Harvard's Joint Center for Housing Studies found that the number of homes with rent under $600 after adjusting for inflation decreased from 9.4 million units in 2012 to 7.2 million units in 2022, based on the report's analysis of 2022 census data.

At the same time, homes with rents over at least $2,000 surged from 3.2 million to 7.3 million units. Given those high costs, just 41% of renters think they'll be able to own a home in the future, according to the New York Fed's February 2023 housing survey.

Powell has previously acknowledged the impact of interest rate increases on housing costs. In June, he said that "housing is certainly very interest [rate] sensitive. It's one of the first places that is either helped by low rates or held back by higher rates, and we certainly saw that over the course of the last year."

Still, the lawmakers want to ensure housing affordability is top of mind for the central bank as it moves forward with its inflation-fighting this year.

"The Fed has already signaled its willingness to cut rates, and the market has responded accordingly," the Democrats wrote. "Working families, already struggling with the cost of housing, need relief now."