U.S. Vice President Vance publicly called on the Federal Reserve again on Thursday, stating that lowering interest rates is the "correct and responsible" choice in response to current inflation data, and expressed "hope for help from the Federal Reserve." This stands in direct conflict with Kashkari's recent insinuation of potential interest rate hikes. With less than two weeks until the FOMC meeting on September 15, market expectations for a rate hike are almost evenly split.

Written 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 Federal Reserve Chairman personally nominated by Trump is beginning to "turn hawkish."

On Thursday, September 3, Vance stated at a White House press conference, "We believe the Federal Reserve should lower interest rates," calling it a "correct and responsible" response to recent inflation data. He added, "We are doing a lot to drive down interest rates, but it would be even better if we could get some help from the Federal Reserve."

Vance linked the call for lower interest rates directly to housing affordability. He said, "The president cares deeply about interest rates, one reason being that he wants Americans to afford homes; the higher the interest rates, the higher the borrowing costs."

According to CNBC, Vance made these comments in response to a question about the Trump administration's views on the volatility of the U.S. bond market.

This statement comes less than two weeks before the Federal Open Market Committee (FOMC) meeting scheduled for September 15 and 16. According to CME Group's FedWatch data, traders currently have nearly a 50/50 expectation about whether there will be a rate hike at this meeting, indicating high uncertainty in market direction.

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Direct Confrontation with Kashkari's Position

Vance's statements create clear tension with the latest signals from within the Federal Reserve.

Just a week earlier, Kashkari, who was personally nominated by Trump as Federal Reserve Chairman, delivered a speech in Jackson Hole, Wyoming, explicitly stating his commitment to bringing the inflation rate back to the 2% target, characterizing short-term interest rates as the "primary tool" for achieving their dual mandate—interpreted by the market as a hint at possible interest rate hikes.

Opinions within the Federal Reserve are also divided. On Tuesday, Federal Reserve Governor Michael Barr stated that he is prepared to support interest rate hikes if inflation remains high; however, on Thursday morning, Governor Waller expressed his preference to maintain the current interest rates.

This is not the first pressure, it happened in June

This is not the first time Vance has publicly pressured the Federal Reserve.

In June of this year, after the U.S. Bureau of Labor Statistics released the CPI data for May, Vance had worked with Trump on the X platform to urge the Federal Reserve to lower interest rates. At that time, the May CPI had only increased by 0.1% month-on-month, and the core CPI also only rose by 0.1%, with annual rates of 2.4% and 2.8%, still above the Federal Reserve's 2% target.

Vance's wording at that time was even more forceful; he directly stated, "The president has said this for a long time, but it is now clearer: the Federal Reserve's refusal to lower interest rates is a dereliction of duty in monetary policy."

Trump also posted on the "Truth Social" platform around the same time, calling on the Federal Reserve to lower interest rates by a full percentage point, emphasizing "this is very important," reason being that lowering interest rates would save a large amount of interest expenditures on America's upcoming debts.

Controversy over Independence Continues to Heat Up

According to CNBC reports, Vance's latest statement may further intensify concerns from the public about the erosion of the Federal Reserve's independence.

Trump has previously consistently pressured Powell, Kashkari's predecessor, for substantial rate cuts and is currently seeking to dismiss Federal Reserve Governor Lisa Cook.

The last time the Federal Reserve lowered interest rates was in December 2024. Since then, officials have continued to express concerns about the risks of tariff policies potentially driving up future prices, remaining stagnant until now.