Economist Peter Schiff challenged former President Donald Trump's claim that Federal Reserve Chair Jerome Powell is hurting the housing market by delaying rate cuts, arguing the opposite effect is more likely.
Peter Schiff Says A Fed Rate Cut May Backfire For Homeowners
"Trump claims that Too-late Powell is harming the housing market and costing homeowners money by not cutting rates. But the last time the Fed cut rates, mortgage rates rose. The same thing is likely to happen if the Fed cuts again. Maybe by not cutting, Powell is helping housing," Schiff wrote on X.
Trump and allies have pressed Powell to ease policy, blaming high borrowing costs for weak sales. "Could somebody please inform Jerome ‘Too Late' Powell that he is hurting the Housing Industry, very badly? People can't get a Mortgage because of him," Trump posted on Tuesday, part of a broader push for reductions.
Schiff points to what happened after the Fed's first cuts in late 2024 when average 30-year mortgage rates climbed again into early 2025, driven more by 10-year Treasury yields and inflation expectations than the fed funds rate.
Schiff Hints Lisa Cook’s ‘Mortgage Fraud’ Likely More Rampant
In a separate X post, Schiff weighed in on an allegation from the Trump administration that Federal Reserve Governor Lisa Cook engaged in mortgage fraud. "Misrepresenting a second home or investment property as a primary residence is mortgage fraud," he wrote, adding, "Thanks to government-guaranteed mortgages, this fraud is likely widespread. Sure, it's worse when a Fed governor does it — but let's be honest, millions of borrowers do the same thing."
The Cook controversy has intensified after the administration and its housing regulator publicized allegations tied to occupancy representations. Cook has denied wrongdoing.
Not Everyone Thinks The Fed Is Doing A Decent Job
Although Schiff feels that the attacks of the Trump administration on the Federal Reserve and its key personnel don’t make sense, other economists don’t necessarily agree. Noted economist and chief economic adviser at Allianz, Mohamed El-Erian, has repeatedly voiced his concerns this week about the Fed's approach to inflation, stating that it may lead to a big "mistake."
El-Erian on Thursday again urged Jerome Powell to resign, saying the move is necessary to protect the central bank's independence from political pressure ahead of the pivotal Jackson Hole Symposium.
It is worth noting that Powell is set to deliver a highly anticipated speech at the Jackson Hole Economic Symposium on Friday.
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