WASHINGTON, Aug 19 – President Donald Trump has once again taken aim at Federal Reserve Chair Jerome Powell, accusing him of causing serious harm to the American housing market by keeping interest rates too high. In a post on Truth Social, Trump claimed that Powell is “hurting the housing industry very badly” and preventing many Americans from being able to afford mortgages. The comments come just days before Powell is scheduled to speak at the annual Jackson Hole symposium, a closely watched event where investors and policymakers look for clues on the future direction of U.S. monetary policy.
Trump argued that inflation is no longer a pressing concern and insisted the Fed should move swiftly toward substantial rate cuts. He has repeatedly argued for aggressive reductions in borrowing costs, far beyond the modest cuts that most analysts expect the central bank to consider in the coming months.
Trump Pushes for Aggressive Rate Cuts
Trump’s criticism of Powell is not new, but his latest remarks highlight the political and economic tensions surrounding the central bank’s decision-making. He claimed there is “no inflation” and said all indicators are pointing toward the need for major cuts. While consumer price increases have cooled significantly from their pandemic-era peaks, they still remain above the Federal Reserve’s 2% target.
Recent data has painted a mixed picture. Consumer prices rose slightly in July, with the annual Consumer Price Index (CPI) increasing 2.7%, unchanged from June. Core inflation, which excludes food and energy, was measured at 3.1% year-over-year. Meanwhile, the core Personal Consumption Expenditures Price Index, another key gauge monitored by the Fed, is estimated to have increased by 0.3% in July, bringing its annual rate to 3%. These figures suggest that while inflation has moderated, it has not yet fully returned to the Fed’s desired range.
The upcoming Jackson Hole speech by Powell is expected to address these economic indicators and provide hints about whether the central bank will move toward rate cuts in its next meeting scheduled for mid-September. Investors are widely anticipating at least a quarter-point reduction, with some expecting an additional cut later in the year. However, Trump has repeatedly demanded much deeper reductions, suggesting cuts of several percentage points would be necessary to relieve pressure on borrowers and stimulate growth.
Within Trump’s own circle, there is also some debate on the appropriate course of action. His Treasury Secretary, Scott Bessent, has floated the idea of a half-point cut in September, larger than what most forecasters anticipate but still well short of the drastic measures Trump himself is calling for.
The Federal Reserve last lowered rates by a half-point last September, just before the presidential election, and followed with another half-point reduction after Trump’s victory. However, since then, policymakers have kept rates steady within the 4.25% to 4.50% range throughout this year, arguing that strong labor markets and persistent inflation risks do not justify steeper cuts.
Housing Market Feels the Strain
Trump’s recent attack focused specifically on the housing sector, one of the most sensitive areas of the economy to changes in interest rates. Higher borrowing costs have kept many would-be buyers on the sidelines, especially first-time buyers facing record-high home prices. According to mortgage lenders, rates for the popular 30-year fixed mortgage have recently eased slightly but remain around 6.7%, far higher than before the Fed began its rate-hike campaign in 2022.
The surge in mortgage costs has compounded the affordability crisis in housing. With limited inventory and soaring property values, buyers are struggling to qualify for loans that just a few years ago would have been well within reach. Trump pointed to this problem in his Truth Social post, suggesting that Powell’s policies were directly blocking Americans from accessing mortgages.
However, the relationship between Fed decisions and mortgage rates is not always straightforward. While the central bank’s policy rate does influence borrowing costs, mortgage rates tend to track the yield on 10-year Treasury notes, which rise and fall based on investor expectations for growth and inflation. As a result, rate cuts by the Fed do not guarantee immediate relief for homeowners or buyers. In fact, after last year’s cuts, mortgage rates briefly spiked instead of declining, underscoring the complexity of the financial system.
Meanwhile, the broader economy shows mixed signals. Job growth has slowed in recent months, though unemployment remains historically low at 4.2%. Producer and import prices jumped in July, raising concerns that consumer prices could climb again in the months ahead. For the Fed, these dynamics add pressure to strike the right balance between preventing inflation from resurfacing and supporting sectors like housing that are straining under the weight of high borrowing costs.
Trump’s combative stance on the Federal Reserve reflects his broader economic strategy, which emphasizes aggressive monetary stimulus to fuel growth and ease financial pressures on households. His critics, however, argue that deep cuts could risk reigniting inflation and destabilizing financial markets.