The director of the Federal Housing Finance Agency (FHFA), William Pulte, publicly urged Federal Reserve Chair Jerome Powell to lower interest rates. Using social media, Pulte said it is time for the Fed to resume cutting rates to help the housing market recover.
Pulte echoed former President Donald Trump’s calls for rate reductions. He wrote, “Jay Powell needs to lower interest rates — enough is enough. President Trump has crushed Biden’s inflation, and there is no reason not to lower rates. The housing market would be in much better shape if Chairman Powell does this”.
President Trump has long pushed for interest rate cuts, blaming his trade war and tariffs for rising prices. Many businesses expect to raise prices soon due to tariffs, according to the Federal Reserve’s recent Beige Book report.
The Fed began lowering rates in the latter half of last year after keeping them high for about a year to fight post-pandemic inflation. However, after inflation showed signs of rising again last fall, the Fed paused rate cuts in January. Since then, rates have stayed between 4.25% and 4.5%.
Powell has said the ongoing trade tensions and tariff uncertainties contribute to economic unpredictability. He described tariff announcements and policy uncertainty as key recent economic factors.
Higher interest rates make borrowing more expensive, slowing economic activity. This can reduce inflation by lowering demand, but it also raises costs for consumers, especially in housing. Mortgage rates have hovered near 7% since 2022, with the 30-year fixed mortgage rate currently around 6.86%.
Shelter inflation, a component of the Consumer Price Index (CPI), has slowed to a 4% annual increase, while overall inflation dropped to 2.3% in April, nearing the Fed’s 2% target.
Pulte’s call for rate cuts comes as the housing market faces pressure from high mortgage costs, and inflation shows signs of easing. He and others argue that lowering rates now could boost housing affordability and stabilize the market.
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