Trump again attacks Fed chair, says Powell ‘hurting’ the housing industry 

WASHINGTON - US President Donald Trump said on Aug 19 that Federal Reserve chair Jerome Powell is “hurting” the housing industry “very badly” and repeated his call for a big cut to US interest rates.

“Could somebody please inform Jerome “Too Late” Powell that he is hurting the housing industry, very badly? People can’t get a mortgage because of him. There is no inflation, and every sign is pointing to a major rate cut,” Mr Trump wrote on Truth Social.

Inflation is well off the highs seen during the Covid-19 pandemic, but some recent data has given a mixed picture, and inflation continues to track above the Fed’s per cent target range.

Mr Trump’s latest salvo against Mr Powell comes ahead of the Fed chair’s Aug 22 speech at the annual Jackson Hole central banking symposium, where investors will cleave to his every word for hints on his economic outlook and the likelihood of a coming reduction in short-term borrowing costs.

The Fed’s next policy meeting will be held from Sept 16 to 17.

Investors and economists are betting that the central bank will cut rates by a quarter of a percentage point in September, with perhaps another reduction of similar size to come later in the year, far less than the several percentage points Mr Trump has called for.

Treasury Secretary Scott Bessent has promoted the idea of a half-point rate cut in September.

The US central bank cut its policy rate by half a percentage point last September, just before the presidential election, and trimmed it another half of a percentage point in the two months immediately following Mr Trump’s electoral victory, but has held it steady in the 4.25 per cent to 4.5 per cent range for all of 2025.

Fed policymakers have worried that Mr Trump’s tariffs could reignite inflation, and also felt that the labour market was strong enough not to require a boost from lower borrowing costs.

Mixed inflation picture

The consumer price index (CPI) rose 0.2 per cent in July, with the 12-month rate through July at 2.7 per cent, unchanged from June.

Core CPI, which strips out the volatile food and energy components, increased 3.1 per cent year over year in July.

Based in part on that data, economists estimated the core personal consumption expenditures (PCE) price index rose 0.3 per cent in July.

That would raise the year-on-year increase to 3 per cent in July. The PCE is a key measure tracked by the Fed against its own 2 per cent inflation target.

And despite a moderate rise in overall consumer prices in July, producer and import prices jumped, a suggestion that higher consumer prices could be coming as sellers pass higher costs onto households.

The inflation picture comes amid a picture of a possible cooling in the labour market, with declines in monthly job gains, although the unemployment rate, at 4.2 per cent, remains low by historical standards.

Mr Trump’s online attacks on the Fed and Mr Powell more typically focus on the cost that higher interest rates mean for US government borrowing.

High mortgage rates are a key pain point for potential home buyers, who are also facing high and rising home prices due to a dearth of housing supply.

Mortgage rates can be loosely tied to the Fed’s overnight benchmark rate but more closely track the yield on the 10-year Treasury note, which typically rises and falls based on investors’ expectations for economic growth and inflation.

A Fed rate cut does not always mean lower long-term rates – indeed, after the Fed cut rates last September, mortgage rates – which had been on the decline – rose sharply.

In recent weeks, the most popular rate – the 30-year fixed mortgage rate – has drifted downwards but, at around 6.7 per cent most recently, is still much higher than it had been before inflation took off after the Covid-19 pandemic shock and the Fed began its rate-hike campaign in 2022. REUTERS