President Trump calls for a 1% interest rate cut, additional stimulus

Trump: Fed should drop rates by “one point”

President Donald Trump took to Twitter as the Federal Reserve began its April-May meeting on Tuesday.

He called for the group to cut the federal funds rate by 1%. This would put the rate at levels not seen since the first quarter of 2018.

Trump also proposed additional stimulus in the form of quantitative easing — when the Fed buys mortgage-backed securities to send rates drastically lower.

If instituted, these policy changes could pull down mortgage rates, even below levels seen during the early-April dip that caused a mini refinance boom.

What the president said

On Twitter, President Trump used direct language when calling for the Fed to make a significant policy move.

China is adding great stimulus to its economy while at the same time keeping interest rates low. Our Federal Reserve has incessantly lifted interest rates, even though inflation is very low, and instituted a very big dose of quantitative tightening. We have the potential to go...

— Donald J. Trump (@realDonaldTrump) April 30, 2019

....up like a rocket if we did some lowering of rates, like one point, and some quantitative easing. Yes, we are doing very well at 3.2% GDP, but with our wonderfully low inflation, we could be setting major records &, at the same time, make our National Debt start to look small!

— Donald J. Trump (@realDonaldTrump) April 30, 2019

Mortgage rate shoppers should be ready to lock

The Fed doesn’t take orders from the president, but it is undoubtedly feeling pressure today as it adjourns its third meeting of the year.

It’s unlikely the Fed would institute such a large rate cut. However, the Fed could hint at future rate cuts during its post-meeting press conference. Even the suggestion of stimulus could send rates lower.

Home buyers and refinancing homeowners should watch rates and be ready to lock as things develop today.

This could be the opportunity many mortgage shoppers have been waiting for.