Fed’s Jerome Powell speaks out about the consequences of Trump’s rates
Many market observers have been critical of the restrictive policy of the FED – especially those in the housing sector who have seen issues decimated by a lack of the demand for home buyers.
But inflation on an annual basis is reduced from a peak of 9.1% in June 2022 to 2.8% from February. The employment market also remains strong and the US still has to dive into a recession as many have predicted.
“Although the uncertainty remains increased, it now becomes clear that the tariff increases will be considerably larger than expected,” said Powell on Friday, according to report Through the New York Times. “The same probably applies to the economic effects, including higher inflation and slower growth.”
https://www.youtube.com/watch?v=osi8ilkancm
Some predictions say that rates will increase inflation in the course of this year by a full percentage point. Optimism falls among both managers and consumers, who believe that the economic output and the growth of employment will be a considerable hit.
The early effects of the rates have already been felt on the financial markets. After China took revenge with a mutual rate of 34% on American import, the industrial average of Dow Jones fell by almost 5% On Friday, the biggest decrease since June 2020 is at the height of the COVID-19 Pandemie.
The housing sector could benefit from the tariff news, at least in the short term. The mortgage interest rate has already lowered as investors move their money from shares and in bonds, so that the Treasury revenues are pushed lower.
“As a result of the fluctuations of this morning, the mortgage interest rate has reached a new year to date,” wrote Logan Mohtashami, lead analyst in housing, Friday. “However, a single announcement about a solution for the trade war can cause bond returns, mortgage interest and stock prices to rise considerably.”
Trump, who nominated Powell to lead the Fed during his first term in the White houseHas been a pronounced critic of the chairman in the past. On the campaign track last year, Trump said that if he was chosen, he would carry out more control over the Federal Reserve.
On Friday the president used his platform on Truth Social To insist on cutbacks at the interest rate, where Powell is told to “stop playing politics!”
The president has rather denied rumors that he would remove Powell, while the chairman said he would ignore attempts to fire him.
But last month, Trump fired two commissioners with the Federal Trade Commission (FTC), Another body that traditionally independently influences the executive branch. And although the Republican chairman of the FTC said that the president had the authority to do this, one of the deposed commissioners suggested that the action could open the door to other termination and called Powell by name.
Mark Calabria, the former director of the Federal Housing Financing Office (FHFA) under Trump – who has again joined the administration in an interim role in the Consumer Financial Protection Bureau (CFPB) – told Housing Last year he did not expect that the wholesale policy changed with the Fed because of the influence of Trump.
“The Fed is active within the government,” said Calabria. “The Fed coordinates with administrations. The argument that Trump in one way or another threats for the independence of the Fed is roughly exaggerated, if not completely false. I don’t have much sympathy for that argument.”
