Trump has been losing his battle to cut interest rates

Key Points:

• President Trump has publicly pressured the Federal Reserve to cut interest rates, claiming lower rates would boost economic growth and housing affordability, but borrowing costs have instead risen since the war in Iran began, making loans more expensive for families and the government.
• Interest rates on 30-year U.S. Treasury bonds recently hit their highest levels in nearly 20 years, surpassing rates from when Trump took office, contradicting his pledge that rates would fall; meanwhile, economic growth has slowed to 1.5% annually.
• Rising interest rates and inflation are becoming political liabilities for Republicans ahead of the midterm elections, as voters struggle with affordability despite low unemployment and steady consumer spending.
• Efforts to improve housing affordability, such as directing mortgage firms to buy home loans and passing a bipartisan home construction bill, have had limited impact, with mortgage rates remaining high and Trump showing lukewarm support for related legislation.
• Federal Reserve Chair Kevin Warsh has allowed market forces to influence rates more than the Fed’s direct actions, signaling potential further rate hikes in September to combat inflation, which may complicate Trump’s goal of lowering borrowing costs before the elections.