Fed Rate Hike Looms as Trump Demands Lower Borrowing Costs
As the Federal Reserve meets to set interest rate policy, financial markets are expecting a hike in rates, which would mark the first increase in three years. The benchmark rate would rise from its current top range of 3.75% to a new high end of 4.00%. Mortgage rates have already climbed sharply toward 7%, averaging 6.76% last week.
The Fed's decision is unwelcome news for President Donald Trump, who has called on the central bank to cut rates and lower borrowing costs. However, Federal Reserve Chairman Kevin Warsh and other policymakers may be forced to raise rates due to the economy's resilience and persistent inflation.
The bond market estimates a more than 90% probability of a rate hike, which would have significant implications for the housing market. Real estate professionals are warning that higher interest rates could slow transaction volume and keep buyers and sellers on the sidelines until confidence returns.