President Trump is demanding for interest rates to be cut, but Federal Reserve Chairman Jerome Powell isn’t budging. Jobs in the private sector rose only by 37,000 in May 2025, which is the lowest job creation has been in over two years, CNBC reported and Trump wants the Fed to take action.
To help get Americans financial relief, Trump is urging Powell to cut rates and is publicly calling on him to do so. On his Truth Social account he wrote, “ADP NUMBER OUT!!! ‘Too Late’ Powell must now LOWER THE RATE. He is unbelievable!!! Europe has lowered NINE TIMES! [sic]”
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Though, Powell has not caved to political pressure and Trump has further expressed his disappointment. The current Fed interest rate is 4.25% to 4.50%, according to the Federal Reserve Bank of New York and mortgage rates are 6.85% per the Federal Reserve Bank of St. Louis and Powell so far is holding steady.
Americans have been feeling the financial strain for years due to inflation and now Trump’s tariffs, so not lowering the interest could hit hard — here’s how below.
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Mortgages
One of the biggest things people put on hold during economic uncertainty are houses. With higher interest rates, affording a home is more challenging.
“The longer rates stay elevated, the more financial pressure builds across the board,” said Shmuel Shayowitz, president and chief lending officer with Approved Funding. “We are already seeing it in housing, where affordability is at its lowest in generations.”
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Most people borrow money when purchasing a home and higher interest rates discourage potential many homebuyers
“High interest rates mean they can afford to buy less house because they’re paying more in interest,” Melanie Musson, finance expert with Clearsurance.com said. “Low interest rates mean they can buy a bigger house.”
Delayed Financial Decisions
Interest rates impact everything from credit cards to car loans and people tend to put big decisions on hold when rates are too high, which means people aren’t spending and the economy can slow down.
“High rates compress household budgets and delay critical financial decisions, such as buying a home or refinancing debt,” Shayowitz said. “If rates remain high for too long, the burden shifts from fighting inflation to slowing growth and limiting opportunities.
Not Starting a Business
When launching a new business, it’s common practice to take out a loan to cover start up costs, but higher interests can deter someone from opening a new business.
“If someone wants to take out a loan to start a business, they’ll have to allocate more of their budget to paying the interest, so they’ll only be able to afford a lower principal amount,” Musson explained. “Higher interest rates mean more subdued growth both personally and in the business world,” she added.
Why Powell Isn’t Lowering the Rates
While Powell has the authority to reduce the interest rates, there are several reasons the Fed is not at this time, according to experts.
“When the economy is coming out of a period of high inflation, the Fed typically hesitates to lower interest rates too quickly because they don’t want to re-ignite inflation,” said Eric Mangold, certified wealth strategist (CWS) and founder of Argosy Wealth Management.
“But if the interest rates are lower, then lending prices for consumers would be less. It’s the balance they need to find to make sure prices are stable, and inflation is kept to a normal target,” he explained.
Trump’s tariffs are also playing a factor in Powell’s decision, according to Musson.
“Powell is concerned about the effect that tariffs will have on inflation and since the Fed’s goal is to get inflation to 2%, they don’t want to lower interest rates because that could increase inflation,” she said.
The US Does Not Follow Europe’s Lead
In Trump’s post, he noted that Europe has lowered the interest rate several times, but the Fed’s decision is based on the U.S. only — not other countries.
“They’ve been burned before by acting too early. But the U.S. economy is now flashing mixed signals: job growth is slowing, credit markets are tightening, and consumer spending is softening,” Shayowitz said.
“At some point, holding rates too high becomes a greater threat than inflation itself. We’re nearing that point,” he added.
Is Trump Right To Want Lower Rates?
Lowering interest rates are one way of easing financial tensions for Americans, and while Trump has been vocal about wanting them down, is he right? Both sides have valid points.
“Mortgage activity is frozen, small business lending is down, and credit delinquencies are on the rise. Rate cuts are warranted — the only question is timing,” Shayowitz said.
“The Fed must walk a fine line between protecting its credibility and responding to genuine economic stress. But this isn’t about politics — it’s about momentum. Right now, the economic engine is slowing, and rate relief would be beneficial,” he added.
While reducing rates would encourage economic growth during a time when jobs are down and Americans aren’t spending as much due to inflated prices, on the flip side, higher inflation is a concern.
“As a consumer, I’d like to see lower interest rates; at the same time, I would like to avoid high inflation because that’s worse in the long run,” Musson said.
Only time will tell what will happen, but Shayowitz said even dropping the rates by a modest amount would send a strong signal to markets and consumers.
“From a housing and mortgage standpoint, even a 50 to 75 basis point drop would unlock a wave of activity that has been sidelined, not just from homebuyers, but also from homeowners looking to move, refinance, or invest,” he explained.
Editor’s note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
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This article originally appeared on GOBankingRates.com: 3 Ways Not Lowering Interest Rates Soon Could Hurt American’s Wallets
