- Trump calls Powell a failure and pushes for rates near 1% as the Fed holds at 3.50%-3.75%.
- The 10Y Treasury yield is near 4.50%, and 30Y mortgage rates above 6.5% keep borrowing costs high.
- May 12 CPI data and Fed signals are the main triggers for the next rate move.
US President Donald Trump intensified his criticism of Federal Reserve Chair Jerome Powell, calling him a “disaster for America” and saying interest rates remain too high.
The remarks came alongside a social media post showing a figure resembling Powell falling into a dumpster. Trump has pushed for aggressive rate cuts, targeting levels near 1%.
The Federal Reserve has kept its benchmark rate between 3.50% and 3.75%. This gap indicates a direct policy conflict. Trump argues lower rates would reduce borrowing costs and ease pressure on the $38 trillion national debt. The Fed continues to focus on inflation control.
Trump has threatened to remove Powell and backed a Justice Department probe tied to Fed operations. The move raised concerns about political pressure on monetary policy.
Market Rates Stay Elevated
Bond yields and mortgage rates show no relief. The 10-year US Treasury yield is nearing 4.50%, signaling tight financial conditions. The average 30-year mortgage rate is above 6.5%, keeping home loans expensive.
Rate movement through 2026 has been unstable. Mortgage rates were near 5.75% in early March, then climbed past 6.3% by the end of the month as inflation rose and Middle East tensions increased.
A short drop below 6% came in mid-April on hopes of peace talks. The move reversed quickly as oil prices stayed high. By early May, rates are around 6.38%.
Higher oil prices pushed inflation higher as numbers reached 3.3% in early April, the highest level in nearly two years. This kept bond yields elevated and blocked any sustained drop in mortgage rates.
No Fed Meeting, But Rates Still Move
The Federal Reserve has no meeting scheduled in May. It paused rates in April for the third straight time. Despite this, borrowing costs continue to change.
Markets are reacting to incoming data, not just Fed decisions. The May 12 Consumer Price Index report is the key event. A lower inflation print could push yields down and bring mortgage rates lower. A higher print would keep pressure on rates.
Fed communication also drives expectations. Any signal from policymakers about a June rate cut can shift bond markets immediately. Even without a formal decision, forward guidance moves yields.
Powell Stays as Pressure Builds
Powell’s term as chair ends May 15, but he plans to remain on the Federal Reserve board. The decision follows months of legal and political pressure from the Trump administration.
Powell has stated that recent actions against the Fed crossed a line and risked weakening the institution. His continued presence is intended to maintain policy independence during a period of direct political challenge.
The standoff remains unresolved. Trump continues to demand lower rates while the Fed continues to hold policy steady, and inflation stays above target.
Related: Jerome Powell Delivers Likely Last Speech, Rates Unchanged
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