Fed's Powell: Absolute best thing we can do for housing is to restore price stability

Fed's Powell: Absolute best thing we can do for housing is to restore price stability

Federal Reserve Chair Jerome Powell delivered a cautious message on Tuesday, emphasizing the central bank's commitment to addressing ongoing inflation while acknowledging the impact of tariffs. Powell's remarks, which were part of his testimony to the House Financial Services Committee and the Senate Banking Committee, highlighted the Fed's intention to stay on hold until the effects of tariffs on prices become clearer [1].

Powell's speech underscored the strength of the economy, describing it as "solid" and the labor market as "around full employment." However, he noted that inflation remains above the Fed's 2% target, with the preferred measure expected to rise to 2.3% in May [1]. The central bank is closely monitoring the effects of tariffs, which historically have resulted in one-time price increases, though they can occasionally contribute to longer-term inflation pressures [1].

Powell reiterated the Fed's dual mandate of maximum employment and price stability, emphasizing that without price stability, the long-term benefits of a strong labor market cannot be fully realized. He stressed that the FOMC is "well positioned to wait to learn more about the likely course of the economy before considering any adjustments to our policy stance" [1].

The Fed's cautious approach has drawn criticism from the housing sector, which has been particularly hard hit by high borrowing costs. Industry voices, including Bill Pulte, U.S. Director of Federal Housing Finance Agency, have called for Powell's resignation, accusing him of damaging the housing market by delaying rate cuts [2]. Trump, who has long criticized Powell, has reinforced these attacks, calling for a 2-2.5 percentage point rate cut and claiming that such a move would significantly reduce the cost of refinancing U.S. government debt [2].

Despite the political pressure, Powell's stance appears to be supported by the majority of FOMC members, with the recent "dot plot" indicating a split in expectations for rate cuts later this year. While nine officials favored either zero or one cut, eight saw two cuts and two expected three, indicating a cautious approach to rate adjustments [1].

In conclusion, Powell's message underscores the Fed's commitment to restoring price stability, which he believes is the absolute best thing for the housing sector and the broader economy. The central bank's approach reflects a careful balance between addressing inflation and supporting economic growth.

References:
[1] https://www.cnbc.com/2025/06/24/powell-emphasizes-feds-obligation-to-prevent-ongoing-inflation-problem-despite-trump-criticism.html
[2] https://www.benzinga.com/real-estate/25/06/46014659/anti-powell-crusade-rages-on-as-housing-sector-demands-fed-chair-resignation