There’s mounting tension in Washington, D.C. over the Federal Reserve’s interest rate policy.
After cutting interest rates by 1% late last year, Fed Chairman Jerome Powell has taken a decidedly different tack in 2025, holding interest rates steady, and frustrating many, including President Donald Trump, who wants rate cuts now.
President Trump has called Powell a “numbskull” for not reducing the Fed Funds Rate, and “Mr. Too-Late” because of the risk that the Fed’s hesitancy will put it behind the curve, possibly causing stagflation or worse, a recession.
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The Fed’s dilly-dallying on rate cuts means homebuyers will have to wait for lower mortgage rates, a fact that hasn’t been lost on housing market experts, including Fannie Mae Chairman Bill Pulte, who is also director of the Federal Housing Finance Agency (FHFA).
Pulte knows a thing or two about the housing market, given he’s the grandson of the founder of the mega homebuilder PulteGroup and formerly served on PulteGroup’s board of directors.
This week, Pulte targeted the Fed’s monetary policy, delivering a harsh rebuke and curt message to Chairman Powell that has raised eyebrows.
Fed interest rate cuts on hold (for now)
The Federal Reserve has an important mission to encourage low inflation and unemployment by raising or lowering the Fed Funds Rate. The FFR is the rate that banks charge each other when lending excess reserve balances overnight.
Unfortunately, its dual mandate is easier said than done. Often, low inflation and unemployment are contrary goals. Higher rates lower inflation but increase job losses, while lower rates decrease unemployment but increase inflation.
Related: Fed interest rate cut decision resets forecasts for the rest of this year
We’ve witnessed that dynamic in real time over the past five years. At risk of surging unemployment due to the Covid pandemic, the Fed doubled down on its zero-interest rate policy of low rates.
The move worked, helping the U.S. avoid a recession or worse. However, low rates (and stimulus payments) caused inflation to spike in 2021. At the time, Fed Chair Powell initially and infamously referred to inflation as ‘transitory;’ however, he was forced to switch gears and embark on the most aggressive rate hikes since the 1980s after inflation skyrocketed to 8% in June 2022.
The higher rates have sent inflation below 3%; however, they’ve done so at a cost, given emerging cracks in the jobs market.
The U.S. unemployment rate has moved up to 4.2% from 3.4% in 2023, and over 696,000 layoffs have been announced this year through May, up 80% year over year, according to Challenger, Gray, & Christmas.
There’s also increased evidence that the economy is weakening. ISM’s latest manufacturing and services PMIs, which measure economic activity, were below 50, suggesting contraction in May.
A concerning job market and potential economic slowing aren’t great recipes for consumer and business spending, yet the Fed has kept its finger off the rate cut trigger, citing inflation uncertainty amid recently enacted tariffs.
Related: Major housing expert predicts huge change to mortgage rates in 2026
Since February, President Trump has placed 25% tariffs on Canada, Mexico, and autos, a 10% baseline tariff on all imports, and stiff tariffs on China, a significant trade partner that supplies just about everything from clothing to car parts. While China’s tariffs have retreated from a sky-high 145% in April that effectively shut down trade, they remain at 30%.
Worries that tariffs may cause inflation to reassert itself in the coming months have Fed Chair Powell a bit boxed in, given that rate cuts to shore up the economy may add to possible inflationary fires this year.
Bill Pulte offers blunt take on Fed Chair Powell’s interest rate pause
Fed Chair Powell argues that a wait-and-see approach makes sense, given that unemployment is historically low and the economy, while showing some worrisome signs, is still expected to grow by 3% this quarter.
Related: Forget tariffs, Fed interest rate cuts may hinge on another problem
“The effects on inflation could be short-lived — reflecting a one-time shift in the price level. It is also possible that the inflationary effects could instead be more persistent,” said Powell after holding rates steady on June 18. “Avoiding that outcome will depend on the size of the tariff effects, on how long it takes for them to pass through fully into prices, and, ultimately, on keeping longer-term inflation expectations well anchored.”
The worry over tariffs isn’t shared by Fannie Mae Chairman Pulte. After Powell held interest rates at their current 4.25% to 4.50% range, he blasted Powell, calling for immediate interest rate cuts to lower mortgage rates and support the housing market.
“Jerome Powell is a main reason for the Housing Supply Crisis in this Country,” wrote Pulte on X. “By improperly keeping interest rates high, Jerome Powell is trapping homeowners in low-rate mortgages and choking off existing home sales — directly fueling the housing supply crisis. He must lower rates.”
Pulte is, at a minimum, correct anecdotally that the housing market is in a crisis, especially with first-time homebuyers who struggle to come up with enough money for a down payment, given supply shortages have propped up home prices, and can’t afford monthly mortgage payments.
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Mortgage rates typically run 2% to 3% higher than the 10-year Treasury note yield, and the Fed Funds Rate highly influences the 10-year yield. As a result, 30-year mortgage rates have risen to roughly 6.8% from 2.7% in early 2021 before Powell raised rates to fight inflation.
In April, the median price for a new home exceeded $407,000, up from $310,000 five years ago. Meanwhile, according to Bankrate, the average mortgage payment doubled to $2,207 in 2024.
With housing affordability so challenging and the Fed firmly in the “no cut” camp, Pulte sent a powerful message to Powell.
“Americans are sick and tired of Jerome Powell. Let’s move on!” wrote Pulte. “Funny thing is Jay Powell is talking right now about the housing market — he has no clue what he can do for the housing market. And he’s not listening to the people who help lead the housing market.”
His blunt advice to Powell?
“RESIGN,” said Pulte.
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