Trump once again criticized Federal Reserve Chairman Powell, saying he has "severely harmed" the real estate industry. Trump broke the tradition of previous U.S. presidents by strongly intervening in the Federal Reserve's monetary policy. He accused Powell on the social platform Truth Social of making it difficult to obtain mortgages due to not significantly lowering interest rates, claiming that "there is no inflation," and called for an immediate rate cut. However, the core PCE inflation rate is expected to reach 3% in July, above the Federal Reserve's target of 2%, indicating that inflationary pressures remain. Powell ignored Trump and maintained the interest rate range of 4.25%-4.50%, which is based on economic rationale. For the Federal Reserve, data speaks.
Trump's public criticism not only challenges the independence of the Federal Reserve but may also exacerbate market uncertainty. The real estate market is indeed under pressure from both high interest rates and high housing prices, but mortgage rates are more influenced by the yield on 10-year Treasury bonds rather than being directly controlled by the Federal Reserve. While Trump's remarks resonate with homebuyers' sentiments, they overlook the inflation risks that may arise from interest rate cuts and the long-term harm to the economy. The Federal Reserve seeks to balance employment and inflation rather than succumbing to political pressure.