Vice President JD Vance said Thursday that President Donald Trump‘s administration is “quite confident” that inflation data justifies the Federal Reserve cutting interest rates, arguing lower rates would help with housing affordability, as long-term Treasury yields have surged over the past few weeks.
Help From the Federal Reserve
Vance said at a White House press briefing that Trump’s focus on interest rates comes down to housing affordability, since higher rates directly raise mortgage costs.
“Obviously, the president cares a lot about interest rates, and I think one of the main reasons he cares a lot about interest rates is because he wants Americans to be able to afford a home,” he added.
He said the administration is confident that current inflation and CPI data support a rate cut, calling it “proper and responsible” for the Fed to act.
Federal Reserve Governor Christopher Waller told Reuters in an interview on Thursday that he was prepared to leave the federal funds rate unchanged at the Fed’s Sept. 15-16 meeting.
“We’re doing a lot of things to try to keep those interest rates down, but it would be nice to have some help from the Federal Reserve,” the Vice President added.
Markets are Pricing in the Opposite Outcome
Vance’s comments come as traders assign a 66.2% probability to a rate hike at the Fed’s Sept. 16 meeting, according to CME FedWatch, following Fed Chair Kevin Warsh‘s hawkish Jackson Hole speech last Friday, reaffirming the central bank’s 2% inflation target.
Vance deferred deeper questions on bond markets to Treasury Secretary Scott Bessent, calling him more knowledgeable “than anybody that I’ve ever talked to.”
The U.S. national debt climbed above $40.12 trillion late Thursday.
Yields on the Rise
The 10-year Treasury yield rose to about 4.8% on Tuesday, its highest level since January 2025, while the 30-year yield has traded above 5% as higher oil prices, inflation concerns, and heavy government borrowing continue to pressure bonds.
New York Fed President John Williams told CNBC on Wednesday that the rise in yields is due to “a strong U.S. economy and a strong economic outlook fueled by big investments” in AI and technology.
Investor Peter Schiff has pushed back on claims that rising yields simply reflect a strong economy, arguing that inflation expectations, fiscal concerns and “declining Fed credibility” are the more obvious drivers.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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