Trump Challenges Fed’s Inflation Stance, Points to Mortgage Accessibility

Donald Trump has expressed concerns about Federal Reserve Chair Jerome Powell’s handling of interest rates, highlighting the impact of current levels on the housing market. He emphasised that higher borrowing costs are creating challenges for Americans seeking mortgages and advocated for a careful reconsideration of interest rate policies.
Posting on his social media platform, Trump questioned the Federal Reserve’s approach, suggesting that it may be contributing to challenges in the housing sector. He emphasised that with inflation appearing to moderate, conditions may warrant a more accommodative policy stance.
While inflation has eased from the highs reached during the pandemic, recent economic indicators have shown a mixed picture. Inflation remains above the central bank’s 2% target, and policymakers continue to monitor price trends closely ahead of upcoming decisions.
Trump’s comments come just ahead of Powell’s scheduled speech at an annual gathering of central bankers, a forum where markets often look for signals regarding future monetary policy. The Federal Reserve’s next policy meeting is set for September 16–17.
Market participants and economists currently anticipate a quarter-point rate cut next month, with the potential for another later in the year. This would fall short of the more substantial cuts Trump has advocated. Some of his former economic advisers, including Scott Bessent, have supported a half-point reduction as early as September.
The Federal Reserve has maintained its benchmark interest rate within a range of 4.25% to 4.50% throughout the year. Previous rate cuts occurred in the months surrounding the last presidential election and its aftermath. Since then, the central bank has taken a cautious approach, citing concerns about inflation risks and confidence in the resilience of the labor market.
In July, the Consumer Price Index rose by 0.2%, with the annual rate holding at 2.7%. Core inflation, which excludes food and energy prices, increased 3.1% year-over-year. Based on these figures, economists estimate the core personal consumption expenditures (PCE) index may have risen 0.3% in July, bringing the annual core PCE rate to around 3%. This metric is closely watched by the Federal Reserve in guiding its inflation policy.
While consumer prices remained relatively stable, higher producer and import costs suggest that inflationary pressures may persist in the months ahead. At the same time, signs of a cooling labor market have emerged, though the unemployment rate remains historically low at 4.2%.
In recent remarks, Trump placed particular emphasis on the effect of current monetary policy on housing affordability. Mortgage rates, which are indirectly influenced by the Fed’s actions and more directly tied to long-term Treasury yields, have remained elevated. Limited housing supply and rising home prices continue to put pressure on potential buyers.
Despite a recent slight dip, the average rate for a 30-year fixed mortgage remains high—around 6.7%—compared to levels seen before the Federal Reserve began its rate-hiking cycle in 2022. That rise in mortgage rates has contributed to a more challenging environment for homebuyers and added to broader concerns about access to affordable housing.