For Buckley, that means while lower mortgage rates in the short term might be a tempting prospect, the risk of longer-term pain is far greater. “Once monetary policy becomes perceived as a political tool, the long-term costs – higher borrowing premiums, currency volatility, and inflation instability – can far outweigh any temporary benefits,” he said.
Will Powell heed Trump’s advice on rate cuts?
Despite the pressure from Trump’s team, Powell has given no indication that he plans to leave ahead of schedule, and the president has also dismissed the idea that he might try to fire the Fed chair this year – although the Supreme Court has signaled Powell would be legally protected from being removed by Trump.
While Trump’s pressure on Powell in recent weeks has included delivery of a handwritten note demanding lower rates, the Fed has given little indication that it intends to diverge from its current approach to monetary policy.
Johnson said it appeared unlikely that the president could ultimately push the Fed into an earlier-than-planned rate cut. “This Fed is very data-driven,” he said, “and I don’t feel that Chair Powell would succumb to political pressure.”
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