Federal Reserve Rate Cuts May Not Translate to Lower Mortgage Rates, Official Warns
The Federal Reserve uses interest rate adjustments to balance price stability and unemployment. Raising rates combats inflation, while lowering them stimulates economic activity.Despite potential changes in leadership – with President expected to appoint a new Fed chair in May following Jerome Powell‘s term expiration – notable rate cuts are unlikely if they risk reigniting inflation, according to Minneapolis Fed President Neel Kashkari.
“If you try to drive the economy faster than its potential to grow and its potential to produce, prices end up just going up across the economy,” Kashkari stated. He emphasized the Federal Open Market Committee’s commitment to data-driven decisions,independent of political influence.
Kashkari has publicly defended the fed’s independence, particularly amid pressure from former President Trump, including attempts to remove Federal Reserve Governor Lisa Cook. He believes maintaining this independence is vital for a stable U.S. economy.
