Over the past few months, President Donald Trump has relentlessly criticized the Federal Reserve and its chairman, Jerome Powell, for not lowering interest rates. Calling Powell “Mr. Too Late” on numerous occasions, Trump’s social media broadsides reached a crescendo last month when he said he might try to fire the Fed chair.
Throughout the president’s barrage of Fed fault-finding, Bill Pulte, director of the Federal Housing Finance Agency (FHFA), has stayed on the sidelines of the interest rate debate. Until now.
On Monday, Pulte took to X to express his views on the Fed’s inaction.
“Jay Powell needs to lower interest rates — enough is enough,” Pulte wrote. “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.”
In January, when President Joe Biden left office, the Consumer Price Index (CPI), a widely tracked measure of inflation, stood at 3%. In April, the CPI clocked in at 2.3%, which is close to the Fed’s stated target of 2% inflation over the long run.
Inflation is a key metric tracked by the Federal Reserve when determining the target range for the federal funds rate, which is the benchmark overnight bank lending rate that influences other borrowing costs and has an indirect impact on mortgage rates.
The Fed also looks closely at the unemployment rate, which was 4.2% in April, according to the U.S. Bureau of Labor Statistics. The Fed doesn’t set a target unemployment rate, but rather strives for maximum employment, which it defines as “the highest level of employment or lowest level of unemployment that the economy can sustain while maintaining a stable inflation rate.”
Following the Fed’s last monetary policy meeting on May 7, Powell said the economic uncertainty surrounding the Trump administration’s global tariff policies has made it difficult to predict the future direction of inflation and unemployment. In justifying the Fed’s decision to hold rates steady, he said the central bank thinks its policy rate “is in a good place to stay as we await further clarity on tariffs and ultimately their implications for the economy.”
Fed president responds to Trump tariff announcement
The ongoing tariff saga took another series of turns over the Memorial Day weekend. On May 23, Trump posted on Truth Social that he was “recommending a straight 50% Tariff on the European Union (EU), starting on June 1, 2025.” On Sunday, Trump reversed course and said he had agreed to postpone the EU tariff hike until July 9 to allow time for negotiations.
Fed voting member Austan Goolsbee, who serves as president of the Federal Reserve Bank of Chicago, weighed in on the potential economic impacts of tariffs during a CNBC interview conducted shortly after Trump’s May 23 announcement. While Goolsbee did not commit to a course of action on interest rates, he said the Trump administration’s tariff policies raise the potential for “stagflation,” which is a combination of stagnant economic growth, high inflation and elevated unemployment.
“Over the longer run, if they’re putting in place tariffs that have a stagflationary impact — which is to say, they slow down output by raising the cost of production while also raising prices — then that’s the central bank’s worst situation,” Goolsbee said.
The Fed’s next monetary policy announcement is scheduled for June 18. As of Tuesday, traders of futures contracts put the odds at 98% that the Fed will keep the fed funds rate unchanged in June, according to the CME FedWatch Tool.
Should the Fed maintain its wait-and-see approach in June, expect a swift social media response from Trump — and perhaps Pulte as well.
