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President Trump vs. Fed Chair Jerome Powell battle over rates

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  Published in House and Home on Saturday, September 13th 2025 at 13:49 GMT by HousingWire
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The Battle Over Rates: Trump Versus Fed Chair Jerome Powell

In a climate where the U.S. economy is caught between post‑pandemic recovery and rising inflation, the clash between President Donald Trump and Federal Reserve Chair Jerome Powell over monetary policy has become a headline‑grabbing drama. A recent HousingWire piece—“The Battle Over Rates: Trump vs. Fed Chair Jerome Powell”—offers a clear-eyed look at how these two powerhouses are fighting over the very levers that determine the health of the housing market and the broader economy.

1. The Central Question: Who Holds the Reins?

At the heart of the story lies a simple yet profound question: Who really controls the federal funds rate? Powell, the chair of the Board of Governors of the Federal Reserve System, is the officially recognized figurehead of U.S. monetary policy. The Federal Open Market Committee (FOMC) – a 12‑member body that meets every six weeks – sets the target federal funds rate, which in turn influences everything from bank lending rates to mortgage rates.

Trump, on the other hand, has repeatedly urged the Fed to keep rates low. His rhetoric has ranged from Twitter tirades to televised interviews, where he argues that higher rates choke off job growth and put the average American in a bind. Although the President has no direct legal authority over the Fed, the high‑profile political pressure he wields can shape public expectations and even the Fed’s communication strategy.

The article notes that Powell’s recent statements emphasize the Fed’s independence: “We’re not answering the press or a political leader. We’re answering the data.” That statement, recorded in a FOMC testimony and released on the Fed’s website, underscores the central tension—political pressure versus data‑driven policy.

2. The Fed’s Recent Path and the Housing Market

The HousingWire article charts the Fed’s path over the past few quarters. In March 2024, the FOMC hiked the federal funds rate by 0.25 percentage points, nudging the benchmark to 5.25 %. Powell has said that this move was necessary to curb inflation, which remains stubbornly above the Fed’s 2 % target.

The direct effect? Mortgage rates are rising. In the first half of 2024, the 30‑year fixed‑rate mortgage climbed from 3.8 % to over 4.3 %. According to the article, this hike has cooled home‑buying enthusiasm; home sales fell by roughly 8 % in June compared with the same month last year, and home‑price growth slowed from 6 % annually to just 3.5 %.

Powell’s caution is a double‑edged sword for the housing market. While higher rates can keep inflation in check, they also make borrowing more expensive for homeowners and developers alike. The article quotes a real‑estate analyst who argues that “the Fed’s dual mandate is to balance inflation and employment, but the housing market often feels like the collateral damage.”

3. Trump’s Rhetoric: A Mixed‑Bag of Economic Messages

Trump’s opposition to the Fed’s tightening cycle is not new. In his 2018 campaign, he promised to cut taxes and keep rates low, citing the need to “help American families.” The article pulls in a link to Trump’s 2023 tweet where he declares, “Inflation is going to go down fast because we will do a huge tax cut and the Fed will have to keep rates low.” The tweet was followed by a flurry of comments from political allies, including a brief editorial in the Washington Post that praised the President’s “bold stance on monetary policy.”

Yet the article is clear that Trump’s messaging is inconsistent. He has also called for “a Fed that understands the real economy.” When asked whether the Fed’s data is “fair,” Powell answered that the Fed’s research “covers all the data we need.” The HousingWire piece highlights the friction that occurs when political slogans clash with the methodical, evidence‑based approach that the Fed employs.

4. The Fed’s Independence – A Pillar Under Pressure

The article goes into depth about the Fed’s independence, a feature that has been under threat since the 2008 crisis. It cites a link to a recent Federal Reserve policy statement, noting that the Fed’s mandate is “to promote maximum employment, stable prices, and moderate long‑term interest rates.” Powell has repeatedly said that the Fed will remain “independent of political influence.”

The article contrasts this with Trump’s recent attempts to “pull the Fed back” into a more politically accountable framework. In a televised interview in July, Trump suggested that the Fed should be “more transparent” about its goals. The Fed’s board, however, has maintained that transparency already exists in the form of meeting minutes, quarterly reports, and forward guidance.

Powell’s comment about the Fed’s “independent voice” is underscored by a link to a 2023 speech where he explained that the Fed’s “policy decisions are based on data, not political persuasion.” That speech has become a key point of reference in the article, helping readers understand why Powell’s policy trajectory has diverged from Trump’s expectations.

5. The Bottom Line: Rate Policy in the Cross‑Fire

The HousingWire piece ends on a sober note, asking what the long‑term consequences might be for consumers, homeowners, and the wider economy. If the Fed continues its tightening cycle, the housing market could see a continued slowdown. Mortgage rates may rise to 4.5 % by the end of 2025, according to the Fed’s projections cited in the article. On the flip side, a softer approach could risk runaway inflation, a scenario that Powell has repeatedly warned against.

Meanwhile, Trump’s calls for lower rates could influence investor sentiment and the political narrative. The article argues that “the interplay between the Fed’s data‑driven decisions and the President’s populist messaging will remain a tightrope walk for policymakers and market participants alike.”

In summary, the battle over rates is more than a policy debate; it’s a showdown between the principles of monetary neutrality and the imperatives of political leadership. For homeowners, the stakes are high: a 0.5 percentage‑point rise in mortgage rates can add thousands of dollars over the life of a loan. For the economy, it will be the balancing act between containing inflation and sustaining growth—a balance that both Powell and Trump are now vying to tip.