“The Fed has basically one tool on inflation,” Elizabeth Warren patiently explained, during a cameo on business television last week. Raising rates, she said, “works for some kinds of inflation problems” but not all of them.

Needless to say, Warren thinks it’s time Jerome Powell lowered borrowing costs. “Right now, high interest are actually increasing costs for families,” Warren added, in the same interview.

She isn’t wrong. About rates or, frankly, about much else either. I’ve been down this road before, including during her White House run and on the innumerable occasions when she’s clashed with Powell during the latter’s semiannual interrogation on Capitol Hill. Say what you will about Warren, but she’s a highly intelligent individual and she’s a quick study. She’s also abrasive as hell, and for a while there, she was becoming a caricature of herself in that regard, particularly when it came to berating Powell about monetary policy.

I’m not as big on Warren as I once was. In my view, quite a bit of the earnest indignation at the many injustices of late-stage capitalism that animated Warren’s early political career gradually gave way to theater and, ultimately, an exacting schoolmarm shtick that’s amusing when it’s directed at bank CEOs but somewhat grating otherwise.

“With interest rates high, we know it’s more expensive to buy a home, we also know it’s more expensive to finance an apartment building or finance any new housing construction, and all of that gets passed on to consumers,” Warren went on, in the same interview mentioned above. “It’s time to get those interest rates down.”

I don’t think she could’ve been any clearer, but Kailey Leinz needed more. “So you would like to see the Fed start cutting rates as soon as the next meeting?” she wondered. Warren pointed to the floor. “Yeah.” Leinz pressed her. “Despite what may happen to the fight against inflation as a result?” Warren laughed. “They are not fighting some of the principal causes of inflation,” she said. “The Fed’s job isn’t just a bunch of numbers. It’s about how families are living this economy.”

Warren isn’t the only Democrat pushing for cuts. A day before the last FOMC decision, Sherrod Brown said that although “more must be done to address the fact that costs remain too high, it is becoming increasingly evident that restrictive monetary policy is no longer the right tool for combatting inflation.” “For working Americans and small businesses who already feel the crush of inflation, higher housing costs and reduced access to credit will only make it worse,” he added.

That’s a preview of what you can expect this week from the Democratic side when Powell wanders up to Capitol Hill. He’ll go before the House on Wednesday and the Senate Thursday. Republicans will ask about inflation and they’ll badger Powell about deficits. Powell will oblige to the extent decorum allows it. He’ll probably say the nation’s fiscal trajectory is unsustainable and leave it at that.

One thing’s certain: Powell will echo his colleagues in pushing back against the notion that the Fed should begin cutting rates as soon as this month. Whether Democrats are aware of this or not, there’s exactly no chance (none) that the first cut’s coming at this month’s policy gathering. Barring a significant deterioration in the labor market, renewed turmoil at regional banks or some black swan event, May’s probably out too.

The last CPI report was very warm thanks to housing (Warren would say that makes her point) and the MoM increase on the “supercore” measure extracted from last week’s PCE update was far too brisk. The labor market, meanwhile, is sturdy, stocks are at record highs, crypto’s running like it stole something (which is apt because in some cases it did) and as discussed at length in the latest Weekly, credit spreads are near post-COVID tights and the primary market’s booming.

So, although Warren’s right in many respects, the case for cuts isn’t… well, isn’t clear cut. Far from it, actually, and the procession of Fed officials markets heard from in recent days indicated there’s no rush whatsoever to dial back the level of policy restriction. Don’t forget: The performance of the US economy in the face of the highest rates in decades suggests policy may not actually be all that restrictive. That’s the r-star debate. It may come up in Powell’s testimony, assuming he thinks lawmakers are capable of wrapping their minds around it.

Market pricing for rate cuts in 2024 converged with the December dot plot recently, although Friday’s ISM miss, Michigan sentiment revision and the attendant front-end rally saw some rate-cut premium get built back in.

It’s possible, I suppose, that the Fed could take away one cut in the March SEP refresh (i.e., that the median for 2024 could reflect just two cuts), but I don’t see much utility in that unless the Committee wants to use the dots to tighten financial conditions. “The March SEP is quite likely to shift the outlook for 2024 GDP and inflation higher and the unemployment rate lower,” BofA’s Mark Cabana said, in a March 1 note. “This macro projection shift naturally raises the risk of the Fed signaling fewer cuts in 2024.”

Powell’s last public remarks were during the 60 Minutes interview early last month. During that appearance, he essentially recapped talking points from the post-January FOMC meeting press conference. Long story short, the Fed wants more evidence that inflation’s on a sustainable path back to 2%.

The overarching message from Fed officials is that while it was nice to see inflation recede to target on a three- and six-month annualized basis, that’s not enough. And although one month doesn’t make a trend, January’s CPI and PCE data were a reminder that the proverbial “last mile” will probably be arduous.

“While a ramp-up in hawkishness is a justifiable outcome based on sticky inflation, relatively easy financial conditions, stable growth and a healthy labor market, we struggle to imagine a significant shift [by Powell] from other policymakers’ recent guidance,” BMO’s US rates team remarked, previewing Powell’s testimony. “That said, by simply messaging the Fed funds rate will be held at 5.33% for the foreseeable future and framing January’s hot inflation data as no more than a bump in the path toward 2% (i.e. downplaying its relevance), Powell will most likely be interpreted as less hawkish than one might have otherwise assumed.”

Do note: Peak terminal rate pricing (nearly 6%) was reached this time last year, when Powell regaled lawmakers with a hawkish message following a spate of early-year macro data which suggested the US economy was still running hot. SVB collapsed 48 hours later.