Trump hints at July rate cut: Fed will ‘do the right thing’
After “a very productive talk,” Trump said he believes the Fed chair is ready to cut interest rates. The president previously pushed for Powell to resign.
Key points:
- President Donald Trump toured the Federal Reserve’s headquarters on July 24 to view the progress of a $2.5 billion renovation project and meet with Chair Powell.
- Trump, who has repeatedly called for interest rate cuts, signaled that he believes the rate cut freeze will end next week.
- Meanwhile, dozens of former Fannie Mae employees filed a lawsuit this week accusing the GSE of employment discrimination.
One week after reportedly showing Republican members of Congress a draft letter informing Federal Reserve Chair Jerome Powell of his firing, President Donald Trump is now saying that won't be "necessary" and there is "no pressure" on Powell to resign.
For months, the president has publicly criticized Powell over the central bank's unwillingness to cut short-term interest rates. Tariff uncertainties, the risk of rising inflation and strong employment data are among the reasons Powell has cited for keeping rates frozen.
The Fed will next decide whether to lower rates during its July 29-30 meeting.
"I feel good about it," Trump said when asked on July 24 about his relationship with Powell. "I just want to see one thing happen, very simple: Interest rates have to come down."
Elsewhere in Washington, D.C., a lawsuit filed this week against Fannie Mae alleges that discrimination played a role in the firings of more than 60 former employees in April.
Trump has 'very productive talk' with Powell
On July 24, Trump became the first sitting president to visit the central bank's headquarters since George W. Bush in 2006. The Fed building is currently undergoing a years-long renovation project estimated to cost $2.5 billion.
The renovation has been criticized by Trump and many within his administration — including Federal Housing Finance Agency (FHFA) Director Bill Pulte, who has called for a congressional investigation in connection with the project.
After Trump's tour, a reporter asked if he believes the renovation project constitutes a "fireable offense." Trump did not answer directly, but when pressed on why he hasn't fired Powell, Trump explained that doing so "is a big move." The president cannot legally remove the Fed chair without cause.
"I just don't think it's necessary. And I believe that he's going to do the right thing," Trump said, referring to short-term rate cuts. The two had "a very productive talk" about rates during the tour, he added.
Despite disagreement within the Fed, a rate cut seemed unlikely in the weeks prior to Trump's visit. So if the Fed doesn't cut rates next week, will Trump fire Powell? "I don't think we're going to do that," the president told reporters.
Fannie Mae accused of discrimination
Shortly after taking the helm at the FHFA, Pulte announced that over 100 Fannie Mae employees were fired for unethical conduct. Now, dozens of former employees are accusing the government-sponsored enterprise of discrimination.
Sixty-six former employees are named plaintiffs in a lawsuit filed on July 21 with the U.S. District Court for the District of Columbia. According to the filing, the employees — some of whom worked at Fannie Mae for over a decade — learned during a group call on April 3 that "they were all being terminated for cause for violating Fannie Mae's Charitable Giving program for fraud," though they "were not given, and still do not have, any indication of any violation of the Charitable Giving program."
The lawsuit alleges Fannie Mae discriminated against the plaintiffs "based on their national origin and age," noting that every former employee participating in the suit is of Indian national origin and "all but a handful" are 40 or older.
Real Estate News reached out to Fannie Mae for comment.