JD Vance said the president is focused on borrowing costs because of what they mean for buying a home. "Obviously the president cares a lot about interest rates," he told reporters after a question from CNBC's Eamon Javers. "One of the main reasons he cares a lot about interest rates is because he wants Americans to be able to afford a home," he said, adding, "When interest rates go higher, that means that borrowing costs are higher."
Vance argued that rate reductions are the "proper and responsible" way to address the latest U.S. inflation readings, saying, "We believe that the Fed should be lowering interest rates." He added, "We're doing a lot of things to try to keep those interest rates down, but it would be nice to have some help from the Federal Reserve."
Vance's comments arrive with the Federal Open Market Committee set to meet on Sept. 15-16. Market odds are close to a coin flip on a rate hike at that gathering, according to CME Group's FedWatch gauge.
Days earlier, Trump's handpicked Fed chair, Kevin Warsh, emphasized bringing inflation back to 2% and pointed to policy rates as the key tool. "Short-term interest rates are the predominant tool to achieve the dual mandate," he said in a speech in Jackson Hole, Wyoming. On Tuesday, Fed Governor Michael Barr indicated he was ready to back an increase in rates should inflation remain high. By Thursday morning, Governor Christopher Waller signaled a greater likelihood of holding rates steady.
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Vance's push adds to President Donald Trump's pressure on the central bank to lower borrowing costs. That backdrop has stirred worries about the Fed's independence, after Trump forcefully urged Kevin Warsh's predecessor to reduce interest rates and is attempting to remove Governor Lisa Cook.
Here's the crux: housing affordability is front and center in this debate, and the next policy decision is still up in the air. With one governor open to a hike, another leaning toward a hold, and traders split on the outcome, the path the Fed chooses will tell you a lot about how leaders are weighing inflation against affordability in the months ahead.
