BiggerPockets Real Estate Podcast

Can Trump Push Jerome Powell Out of the Fed? w/WSJ's Nick Timiraos

Nov 22, 2024

In this discussion, Nick Timiraos, a reporter at The Wall Street Journal and Federal Reserve expert, dives into the complex relationship between President Trump and Fed Chair Jerome Powell. They explore whether Trump could pressure Powell and the implications for Fed independence. Timiraos addresses the risks of high interest rates on the economy, discusses potential future rate cuts, and evaluates the political dynamics surrounding the Fed's role. Listeners gain insights on how these developments could shape the real estate landscape.

34:47

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Episode guests

Nick Timiraos

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Episode notes

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Quick takeaways

The independence of the Federal Reserve is vital for maintaining economic stability amid political influences and pressures to alter rate policies.

The interaction between bond market dynamics and Fed rate cuts highlights the complexity of mortgage rate movements for real estate investors.

Deep dives

Impact of Federal Reserve Decisions on the Housing Market

The Federal Reserve significantly influences the economy and the housing market by indirectly affecting borrowing costs, even though it does not set mortgage rates directly. Recent reductions in the federal funds rate by 75 basis points this year have not led to a corresponding drop in mortgage rates, as these rates are more closely aligned with bond market dynamics. When the bond market perceives a lower risk of recession, bond yields rise, which in turn can increase mortgage rates. This complexity suggests that real estate investors must stay attuned to both Fed policies and bond market movements.

Intro

2min

Federal Reserve Policy and Political Implications

7min

The Fed's Independence and Its Market Impact

7min

The Federal Reserve's Independence and Political Dynamics

11min

Exploring the Future of the Fed and Market Impacts

5min

Trump, Powell, and the Fed's Future

5min

Has the Federal Reserve gone too far? Many Americans are critical of the Fed’s move to raise interest rates sharply, pause for years, and then slowly start implementing rate cuts. The arguably most prominent critic of the Fed? President-Elect Donald Trump, who, shortly after nominating the current Fed chair, Jerome Powell, reversed his opinion on whether Powell was the right person for the job.

Now, with Trump coming back to the White House, Powell’s job hangs in jeopardy—or does it? Can a President fire the Fed chair? Does the President have the authority to influence how the Fed operates? What would happen if Trump decided to go after Powell and request his resignation? Nick Timiraos, reporter at The Wall Street Journal and Federal Reserve expert, is on to answer these questions.

Nick gives us the latest update on rate cuts, where the Fed is headed, how the future of the Fed looks with Trump back in office, and why some politicians champion “Fed Independence,” while others argue that Fed power has overstepped its bounds. Are Trump and Powell more aligned than they think, and is this government drama all talk? We’re getting Nick’s expert viewpoint on it all.

In This Episode We Cover:

Why “Fed Independence” could actually be a crucial piece to keeping the economy stable

Whether or not Trump has the authority to fire and replace a Fed chair

Future rate cuts, inflation concerns, and the Fed’s latest “signal” on rates

Powell’s simple response when asked if he would resign because of Trump’s request

Why the Fed does NOT have to answer to the President (and is this a good thing?)

Trump’s proposed tax and tariff policies and why they could challenge the Fed

And So Much More!

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