On The Market Trump Wants 1% Rates: What Will Happen If He Gets Them
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Aug 7, 2025 The podcast dives into President Trump's contentious relationship with the Federal Reserve over interest rates. It questions whether his push for a 1% rate could inadvertently increase mortgage rates instead. The discussion emphasizes the critical role of the Fed's independence in economic stability and explores the impact of political pressure on financial markets. Listeners will learn how Fed decisions influence investor confidence and the vital interplay between bond markets and mortgage rates.
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Fed's Dual Mandate Explained
- The Federal Reserve's dual mandate requires balancing price stability and maximizing employment.
- Controlling interest rates is their main tool to maintain this balance and stabilize the economy.
Importance of Fed Independence
- Fed independence means monetary policy decisions are free from short-term political pressure.
- This independence builds investor confidence and stabilizes the financial system.
Why U.S. Bonds Are In Demand
- The strong demand for U.S. bonds is driven by stability, economic growth, and political neutrality.
- This demand lowers U.S. borrowing costs, which benefits mortgage rates and national debt payments.