President Donald J. Trump is increasingly dissatisfied with Federal Reserve Chairman Jerome Powell's refusal to cut interest rates. Trump argues that reducing rates would lower government borrowing costs, while Powell warns that premature cuts could worsen inflation. Housing experts believe that terminating Powell could negatively impact the real estate market and first-time homebuyers. GOP members caution against the potential economic turmoil of such a move, emphasizing the importance of the Fed's independence for market confidence and decision-making integrity.
"If long-term inflation expectations increase, that would flow directly into a higher mortgage rate," Eric Finnigan, vice president of Demographics Research at John Burns Research and Consulting, tells Realtor.com®.
"At today's rates and home prices, it costs twice as much to own an entry-level home than rent it. Even higher mortgage rates would push homeownership out of reach for even more potential first-time buyers who don't have a cushion of home equity in their current home."
"If anybody thinks it would be a good idea for the Fed to become another agency in the government subject to the president, they're making a huge mistake," GOP North Carolina Sen. Thom Tillis said in a floor speech, according to the Associated Press.
"If [the markets] thought for a minute that [a Fed chair] wasn't independent, it would cast a spell over the forecasts and the integrity of the decisions being made by the bank," reportedly agreed GOP South Dakota Sen. Mike Rounds.
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