Article by Long Yue, Wall Street Journal
U.S. Vice President Vance once again publicly pressured the Federal Reserve to lower interest rates—at a time when the Fed chair nominated by Trump himself is beginning to "hawkish."
On Thursday, September 3, Vance stated at a White House press briefing, “We believe the Federal Reserve should cut interest rates,” calling this the “correct and responsible” response to recent inflation data. He added, “We are doing a lot to bring down rates, but it would be better if we could get some help from the Federal Reserve.”
Vance directly links the call for rate cuts to housing affordability. He said, "The president is very concerned about interest rates, in part because he wants Americans to be able to afford homes—the higher the rates, the higher the cost of borrowing."
According to CNBC, Vance made the above remarks when asked about the Trump administration's views on fluctuations in the U.S. bond market.
This statement comes less than two weeks before the Federal Open Market Committee’s (FOMC) interest rate decision meeting on September 15–16. According to CME Group’s FedWatch data, traders currently have nearly equal expectations for whether the meeting will result in a rate hike, indicating high uncertainty in market direction.
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Directly confront Wash's position
Vance's statement creates a clear contrast with the latest signals from within the Federal Reserve.
Just under a week ago, Powell, the Fed chair nominated by Trump himself, spoke in Jackson Hole, Wyoming, clearly stating his commitment to bringing inflation back to the 2% target and characterizing short-term interest rates as the "primary tool" to achieve the dual mandate—a interpretation by markets as signaling a potential rate hike.
Opinions within the Federal Reserve remain divided. On Tuesday, Federal Reserve Governor Michael Barr stated that he is prepared to support rate hikes if inflation remains elevated; however, earlier on Thursday, Governor Waller indicated that he prefers to keep rates unchanged.
This isn't the first time pressure has been applied; they did the same thing in June.
This is not the first time Vance has publicly pressured the Federal Reserve.
In June this year, after the U.S. Bureau of Labor Statistics released the May CPI data, Vance joined Trump on X to jointly call on the Federal Reserve to cut interest rates. At that time, the month-over-month increase in May CPI was only 0.1%, and core CPI also rose by just 0.1% month-over-month, with annual rates of 2.4% and 2.8% respectively—still above the Fed’s 2% target.
Vance’s wording was even stronger at the time, directly stating: “The president has said this all along, but it’s now clearer than ever: the Fed’s refusal to cut rates is a failure of monetary policy.”
During the same period, Trump also posted on the Truth Social platform, calling for the Federal Reserve to cut interest rates by a full percentage point and emphasizing that “this is very important,” arguing that lower rates would save significant interest expenses on upcoming U.S. debt maturities.
The controversy over independence continues to escalate.
According to CNBC, Vance's latest remarks may further fuel concerns about the erosion of the Federal Reserve's independence.
Trump previously pressured Powell, Wash’s predecessor, to significantly cut interest rates and is now seeking to remove Fed Governor Lisa Cook.
The Federal Reserve last cut interest rates in December 2024. Since then, officials have remained on hold, continuously expressing concern that tariff policies could raise future prices.