Editor’s note: Morning Money is a free version of POLITICO Pro Financial Services morning newsletter, which is delivered to our s each morning at 5:15 a.m. The POLITICO Pro platform combines the news you need with tools you can use to take action on the day’s biggest stories. Act on the news with POLITICO Pro . We’ve crossed a political threshold: After months of relative silence, lawmakers are increasingly speaking out about Federal Reserve actions, something that only a few politicians like Sen. Elizabeth Warren had been willing to do. A burst of recent letters from Senate Banking Chair Sherrod Brown (D-Ohio), Sen. John Hickenlooper (D-Colo.) and a coalition of other Democrats was punctuated on Friday by House Financial Services Chair Maxine Waters , who called on Fed Chair Jerome Powell to slow down the pace of raising borrowing costs. “I am deeply troubled by the Federal Reserve’s … rapid series of super-sized interest rate hikes, which may inflict unnecessary pain on millions of individuals and families while sending the economy into a devastating recession,” Waters wrote. “Although you indicated that there may be smaller rate increases to come, it is essential that the Fed take into consideration the consequences of previous and future rate hikes.” Your guest MM host has written about mounting anxiety that the Fed has continued to raise rates at this speed . That means the central bank can expect more vocal critiques from politicians, even if the Fed does begin to scale back the size of the hikes. Republicans have been more muted in their criticism of the Fed, preferring to focus their inflation blame on President Joe Biden. But last week brought signals that even some GOP voices could get louder. Sen. Pat Toomey (Pa.), the top Republican on the Banking Committee, wrote to Powell on Thursday that the central bank should resist buying U.S. government debt if trading conditions continue to deteriorate in that market. He cited press reports that the Fed has asked Treasury market participants whether more serious problems could crop up, requiring the Fed to step in. He also pointed to the Bank of England’s recent moves to shore up its own sovereign debt market. “I strongly urge you to resist such intervention, for at least two reasons. First, such action would undermine the Fed’s principal objective of fighting inflation, which continues to pose significant challenges for the U.S. economy,” Toomey said. “Second, it would repeat some of the mistakes of quantitative easing, such as obscuring the true cost and consequences of our mounting national debt.” If you’ll permit us a slight digression, there’s a lot of noise about the Treasury market right now, but your host has spent a lot of time talking with investors, and it doesn’t seem like the place where the U.S. government gets its financing is in imminent danger. But the last few years have brought unexpected shocks, and the concern is that any fragility could be disastrous if we get another jolt. Toomey called on the Fed to “pursue durable reforms that would enable the Treasury market to function smoothly during times of stress,” which is also a common refrain from investors and government officials. It’s worth noting that the Fed doesn’t seem overly concerned about a near-term breakdown in the market, though officials are definitely keeping an eye on it . But back to our original point: Toomey’s letter, like Waters’, is a sign that Powell’s honeymoon with Congress is partially over (though he’s still widely liked by lawmakers), and every step the central bank takes from here will be more closely scrutinized. For an institution whose effectiveness rests on its credibility with investors, the public and lawmakers, that matters. IT’S MONDAY — Have a tip, story idea or feedback to share? Let us know: kdavidson@politico.com and ssutton@politico.com .
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