The Federal Reserve held interest rates steady despite strong economic growth and pressure from President Trump, sparking questions over affordability and policy motives.
Key Facts:
- The Fed kept interest rates unchanged following a 3% GDP growth in the second quarter.
- President Trump criticized Fed Chair Jerome Powell for not lowering rates, dubbing him “Too Late.”
- Reporters pressed Powell on the impact of high rates on mortgage affordability and tariffs on inflation.
- Powell said the Fed does not directly control mortgage rates and defended current policy as focused on inflation and employment.
- Fed Governors Michelle Bowman and Christopher Waller dissented, calling for a 0.25% rate cut—the first double dissent since 1993.
The Rest of The Story:
During a Wednesday press conference, Federal Reserve Chairman Jerome Powell defended the decision to maintain current interest rates.
Despite a strong 3% GDP growth in Q2 and President Trump’s urging to cut rates, the Fed chose to hold steady.
Reporters from major outlets questioned Powell on the impact of high rates, particularly on the housing market.
Fox Business’s Ed Lawrence asked how the Fed could justify 7% mortgage rates to struggling homebuyers.
Powell responded, “We don’t set mortgage rates at the Fed… there are other things going on in the housing sector… \[like] a long-term housing shortage.”
Additionally, Wall Street Journal reporter Nick Timiraos raised concerns over inflation tied to new tariffs.
Powell acknowledged that “substantial amounts of tariff revenue” are being collected—around \$30 billion a month—but insisted most costs are being absorbed by exporters and retailers, not passed to consumers.
Meanwhile, two Fed governors broke ranks with Powell, advocating for a modest rate cut.
Both dissenters—Bowman and Waller—have been floated as possible replacements for Powell.
Commentary:
This is exactly why Trump labels Powell “Too Late.”
The economy is performing well—3% GDP growth is no small feat—and yet the Fed continues to stand still while Americans face real economic pressure.
Even a modest interest rate cut could make a major difference for families and individuals.
High mortgage rates are locking people out of homeownership and freezing the housing market.
Homeowners are sitting on their properties because they can’t afford to trade up or even down without a significantly higher interest burden.
This stagnation hurts everyone.
Powell’s claim that the Fed doesn’t control mortgage rates is technically correct, but misleading.
The Fed’s overnight rate has enormous influence on Treasury yields, which directly affect mortgage rates.
His comments sidestep accountability while downplaying the ripple effects his policies cause.
His other concern—tariff-related inflation—is also overblown.
Thus far, there is little real evidence that tariffs have had any meaningful inflationary effect on consumer goods.
In fact, the tariffs are generating massive revenue, \$30 billion a month, while incentivizing domestic production and job creation.
That’s not something to fear—it’s an opportunity.
More jobs and more domestic manufacturing will boost the economy in ways that offset short-term pricing shifts.
Employment will rise.
Income will rise.
And tax revenue will rise.
All of that points to a stronger American economy—if the Fed doesn’t choke it off first.
Americans are overdue for some relief.
The pressure on buyers, sellers, and small businesses is growing.
It’s time for the Fed to recognize that financial theory isn’t matching up with ground-level reality.
It’s unclear whether Powell genuinely believes holding rates is the right call or if he’s simply opposing anything tied to the Trump administration.
Either way, two panel members disagree with him.
The Fed has a chance to act before it’s “too late.”
The Bottom Line:
Jerome Powell defended the Fed’s decision to keep interest rates steady despite economic growth and public concern over mortgage affordability.
Trump’s criticism of Powell as “Too Late” echoes the frustrations of many Americans shut out of the housing market.
As inflation fears tied to tariffs appear overstated and domestic job growth looms, the Fed’s hesitation risks stalling opportunity.
Americans need relief—and the Fed’s next move could be pivotal.
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