WHAT DANNY IS SAYING
A: If Trump really tries to fire a Federal Reserve governor, markets aren’t exactly going to throw him a parade. Investors crave stability, and the Fed’s superpower is its independence — it’s supposed to be the adult in the room, insulated from political mood swings. Yank one of its governors because you don’t like their policy stance, and suddenly the world wonders: is monetary policy being guided by data, or by whoever had the loudest rally last night? That uncertainty spooks both Wall Street and Main Street. Expect jitters in equities, pressure on the dollar, and higher volatility overall.
Sure, some corners of the market might cheer. If traders think a Trump-picked replacement would lean toward rate cuts, certain assets could get a short-lived sugar high. But that’s an immediate buzz, not a long-term confidence-builder.
What lasts is credibility, and chipping away at the Fed’s independence erodes it. Add in Trump’s recent ousting of the head of the Bureau of Labor Statistics — limiting the availability of reliable employment and inflation data — and investors are already wary of the blindfold. At some point, it stops looking like bold leadership and starts looking like market manipulation. And markets, famously, hate being played.
-Danny Yadegar, City Real Estate,
510-909-8330,
[email protected]
WHAT OTHERS ARE SAYING
A: The Federal Reserve, established in 1913, is crucial for maintaining the stability of the U.S. economy. It oversees banks, collaborates with foreign banks, sets short-term monetary policies, and manages the money supply. Presidents are not directly involved to avoid political conflict.
Recently, the Federal Reserve has faced pressure from President Trump to lower interest rates — perhaps in response to rising tariffs and a 24% cumulative inflation rate since 2020. Chairman Jerome Powell and the Board of Governors, including Lisa Cook, are making decisions based on real-time economic data.
The Fed is considering lowering interest rates this fall if the data supports it. Questions about Lisa Cook’s mortgage application may need court resolution, if any. Currently, the Fed is planning a possible ¼% drop with another ¼% drop later in the fall.
Buyers are ready to purchase their next dream home and sellers are ready to “right-size” to their next home. If rates drop, they will also lower the cost of student loans and credit cards.
If you want to follow possible movements in interest rates, watch the 10-year U.S. Treasury note. The 10-year Treasury note has the greatest influence on mortgage rates. It’s important to remember that the actions of a single Federal Reserve governor do not automatically trigger a nationwide interest rate change.
-Anne Feste, Vanguard Properties
A: President Trump’s attempt to fire a Federal Reserve governor is likely to affect the market negatively, at least in the short term. The Fed’s independence is crucial for maintaining investor confidence and economic stability, and is designed to allow it to make decisions based on the long-term health of the economy rather than short-term political interests.
Any action that threatens that independence can create uncertainty in financial markets, potentially leading to increased interest rates or volatility. An independent Fed is seen as more credible and effective in achieving its economic goals.
For real estate, uncertainty is never good. If markets were to react negatively, we could see mortgage rates rise due to higher Treasury yields, making home loans more expensive and potentially cooling buyer demand. Additionally, instability in the broader economy may make both buyers and sellers hesitant, slowing down transactions.
While some may view Trump’s action as an attempt to push for lower interest rates — typically good for real estate — undermining the Fed could backfire. Confidence in long-term economic policy is key to a healthy housing market. So, from where I stand as a Realtor, such a move is more likely to shake confidence than boost it.
-Lisa McIntosh-Milburn, Windermere Signature Properties
