President Donald Trump has made lowering mortgage rates a central economic promise, but his pick to lead the Federal Reserve could complicate that goal, The Washington Post writes.
Kevin Warsh, a longtime critic of the Fed’s massive balance sheet, has argued that holding trillions in Treasury bonds and mortgage-backed securities distorts markets and fuels inflation. Economists say aggressively shrinking that $6.6 trillion portfolio could push long-term interest rates higher, including mortgage rates, even if the Fed cuts short-term rates.
The potential conflict highlights tension between Trump’s housing affordability agenda and Warsh’s policy instincts as he prepares to take over when Chair Jerome Powell’s term ends. While Warsh has not outlined a detailed plan, analysts note that mortgage rates are shaped by multiple forces and may not fall simply because the Fed eases benchmark rates.
The outcome will hinge on how quickly—and how boldly—the Fed moves to unwind its balance sheet.
Read the full story from The Washington Post.
