• White House economic adviser Kevin Hassett said President Trump believes interest rates can be lower, but the Federal Reserve's recent hold and internal division suggest otherwise.
  • The Fed kept its benchmark rate at 3.75%–4.00% on October 28, with two officials favoring a hike, citing strong growth and elevated inflation.
  • Mortgage rates remain near 7.4%, putting homeownership out of reach for millions, but experts caution that a presidential preference alone won't bring borrowing costs down.

White House Pushes for Lower Rates

President Donald Trump believes interest rates can be lower, according to Kevin Hassett, the administration's top economic adviser, who reiterated the White House's push for cheaper borrowing costs. Hassett told CNN earlier this month that mortgage rates "have to come down" and predicted they would fall "very quickly over the next few months." That forecast, however, contrasts with the Federal Reserve's latest policy stance and internal deliberations.

The central bank held its benchmark interest rate steady at 3.75%–4.00% on October 28, following a quarter-point increase in September—the first hike in over three years. The decision passed 10–2, with Governor Lisa Cook and Cleveland Fed President Beth Hammack preferring an additional quarter-point increase. The committee's statement described economic growth as strong and inflation as elevated, signaling no imminent pivot to cuts.

Fed's Caution and Inflation Concerns

The Fed's reluctance to ease stems from persistent inflationary pressures. September consumer-price inflation reached 3.7% year over year, well above the central bank's 2% target. Fed Chair Kevin Warsh, who succeeded Jerome Powell in May, warned that renewed energy-price increases must not spread into broader inflation. "Politics played no role" in the decision, Warsh said, addressing suggestions that the approaching midterm elections influenced the committee.

Economists and market pricing after the meeting still leaned toward a December increase, not a cut. Investors assigned nearly an 85% probability to a quarter-point hike at the December 8–9 meeting, according to AP reporting. "Don't mistake a pause for a truce; the battle against inflation is far from over," said Diane Swonk, chief economist at KPMG.

Mortgage Rates and Housing Affordability

The administration's focus on borrowing costs is understandable. The average 30-year mortgage rate hovered near 7.4% earlier in October, easing slightly since. Oxford Economics estimated that higher mortgage rates had put home purchases out of reach for an additional 5 million Americans since the beginning of the year. Hassett's comments reflect concerns about housing affordability, a key campaign issue ahead of the midterms.

Yet a presidential call for lower rates does not itself lower household borrowing costs. Market forces had pushed borrowing rates higher even before September's Fed increase, and mortgage rates do not move mechanically with the Fed's policy rate. Warsh also noted that credit conditions had already tightened for some households and businesses, and that debt-financed data-center construction could become more sensitive to higher rates.

Political and Economic Crosscurrents

The policy divide comes six days before U.S. midterm elections, with affordability and living costs prominent campaign issues. The administration is emphasizing borrowing relief, while the Fed stresses its inflation objective and independence. That tension extends beyond rhetoric: Trump has renewed efforts to remove Governor Cook after an earlier attempt. Cook denies mortgage-fraud allegations, and the Supreme Court allowed her to remain in office while litigation continues. Her vote for a higher rate underscores the policy disagreement, though it does not establish political motive.

Businesses and consumers face competing risks. Tighter policy can constrain spending and investment, but the Fed argues that persistent inflation also requires action to restore price stability. As AP reported, consumers have soured on higher prices for essentials including gasoline, groceries, and clothing.

What's Next

The immediate backdrop is a renewed tightening cycle, and the October hold was a pause after September's increase, not the start of an easing cycle. Near-term, the evidence favors caution about interpreting Hassett's comment as a signal of imminent cuts. The path forward depends on incoming inflation and activity data. Sustained disinflation would make the administration's desired lower-rate environment easier to reconcile with the Fed's mandate; persistent price pressure would prolong the conflict. The Fed's current statement commits to returning inflation to 2% but offers no timetable for cuts.

Clarification: An earlier version of this article misstated the date of the Fed's October meeting. It was October 28, not October 29.