Federal Reserve Chair Discusses Interest Rates

During a press conference on Wednesday, Federal Reserve Chair Jerome Powell faced multiple questions from reporters about the decision to keep interest rates stable.

The Fed decided not to alter interest rates, even after a reported 3% GDP growth for the second quarter and pressure from President Donald Trump. Reporters from entities like the Wall Street Journal and Fox Business Network probed Powell on why interest rates weren’t being lowered, particularly highlighting the impact on home buyers. For instance, Fox Business reporter Ed Lawrence pointed out how challenging a 7% mortgage rate can be for those looking for homes.

Lawrence asked Powell directly, “How do you justify anyone looking for a home facing a 7% mortgage?”

Powell responded, acknowledging that “Housing is a special case.” He clarified that the Fed doesn’t set mortgage rates, as those are influenced by long-term rates similar to Treasury fees. He mentioned the ongoing issues in the housing sector, particularly the long-term housing shortage. “We’re not building enough housing. This isn’t something the Fed can directly resolve, and it will get better once things stabilize,” he added.

There have been reports of tension between Trump and Powell over the Fed’s stance on interest rates.

Additionally, two members of the Federal Open Market Committee, Governors Michelle Bowman and Christopher Waller, opposed the decision to maintain stable rates. They argued that this move effectively equated to a 0.25% cut, marking their dissent as the first of its kind since 1993. They have also been mentioned as potential replacements for Powell, according to sources.

Lawrence and Wall Street Journal’s Chief Economic Correspondent, Nick Timiraos, also inquired about the tariffs imposed by Trump earlier this year. Timiraos asked Powell whether inflation effects observed in June’s Consumer Price Index report might point to the impact of these tariffs.

Powell commented on the matter, noting that it’s still somewhat early to assess how significant the tariff revenue—approximately $30 billion a month—will be on overall inflation trends.