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llustration by Lanette Behiry/Real Estate News
In 2026 the Trump administration repeatedly targeted the Federal Reserve and its Chair, Jerome Powell, sparking fears that the central bank’s autonomy could be compromised. The year was marked by a flurry of mergers and industry splits, yet a handful of figures and themes stood out. Real Estate News has highlighted the top ten movers of 2025, judging by their influence on the sector.
The Fed usually flies under the radar for most consumers, but 2025 thrust it into the spotlight. Trump publicly urged the Fed to cut short‑term rates and called for the resignation of several officials, including Powell, in an effort to align the Board of Governors with his agenda. Analysts warned that politicizing the Fed could erode investor confidence in its monetary policy and destabilize the U.S. economy. Powell, however, stayed resolute, dismissing White House directives and affirming that the Fed would base decisions on data.
**Monetary policy focus**
The Federal Open Market Committee (FOMC) concentrated on sticky inflation and a softening labor market. With a robust economy and persistent inflation concerns, the Fed paused rate cuts at its first 2025 meeting. The 30‑year fixed‑rate mortgage topped 7 % in January, marking the third consecutive year of an early spike, and stayed above 6.6 % until August.
After Trump announced sweeping “Liberation Day” tariffs in April, the Fed’s attention shifted to the labor market. In September it made its first 2025 rate cut, followed by two additional 25‑basis‑point reductions in October and December, even as the federal shutdown cut off key economic data. Mortgage rates initially rose after each cut but trended downward, settling near 6.2 % by year‑end. Fannie Mae and Freddie Mac added billions of mortgage‑backed securities and home loans to their balance sheets, easing affordability, though pandemic‑era price gains kept the market out of reach for many buyers. Economists predict affordability will remain a challenge into 2026.
**External pressure and independence debate**
The Fed’s attempts to support the labor market without inflating prices drew attention from Trump and FHFA Director Bill Pulte, who publicly criticized Fed meetings and demanded rate cuts. While mortgage rates are less tied to the federal funds rate than short‑term loans, they are influenced by inflation and investor sentiment. Trump’s persistent calls for cuts raised consumer expectations that mortgage rates would fall if short‑term rates dropped.
Trump’s campaign intensified in August when he targeted Fed Governor Lisa Cook, a Biden appointee, accusing her of mortgage fraud and seeking her dismissal. This was the first time a president tried to remove a sitting Fed governor, provoking legal experts to question the move’s legality and its implications for central bank independence. Cook’s potential removal prompted former Fed chairs and advisers to file a legal brief with the Supreme Court, underscoring the importance of Fed autonomy for maintaining public confidence and policy credibility.
**Powell’s stance**
Despite the onslaught, Powell largely stayed out of the political fray. He voiced concerns about Trump’s tariffs but avoided public commentary beyond scheduled speeches. When asked in May whether presidential pressure affected the Fed, he replied, “It doesn’t affect doing our job at all.” Powell consistently emphasized that the Fed would only cut rates when data warranted it, even when that conflicted with the president’s wishes. However, internal dissent surfaced as voting members publicly debated rate cuts, culminating in a 9‑3 vote to cut rates at the final 2025 meeting—the first time in six years that three officials dissented.
**Looking ahead**
Cook’s future remains uncertain, and Powell’s term ends in May. The Fed’s December meeting signaled a wait‑and‑see approach for 2026, but a new chair could pursue a different strategy. Mortgage rates are expected to hover near current levels, keeping affordability concerns front and center. The Fed’s governing board recently reappointed 11 of 12 regional presidents, preserving some stability. Yet a competitive race to replace Powell is underway, with candidates’ ties to the president and their stance on Fed independence under scrutiny. Some, like former White House adviser Jason Furman, suggest the next chair may end up being the least influential in decades, given the climate of dissent and the difficulty of achieving consensus among voting members.
