AILSA CHANG, HOST:
Now, if you were expecting interest rates to drop any time soon, you may have to keep on waiting. Today, Federal Reserve Chairman Jerome Powell told a Senate committee that he is in no hurry to cut borrowing costs. He pointed to still-stubborn inflation and to the strong job market. What else did Powell have to say about the economy and the moves made so far by the new Trump administration? Well, for help answering that question, we're joined now by NPR's Scott Horsley, who followed this tense meeting so we didn't have to. Hi, Scott.
SCOTT HORSLEY, BYLINE: Hi, Ailsa.
CHANG: OK, the Fed sets short-term interest rates, but Powell was asked more than once today about mortgage rates, right? Like, what did he have to say on that front?
HORSLEY: Yeah, mortgage rates are still hovering up close to 7%, which is making homeownership a real challenge for a lot of would-be buyers. It's also discouraging the kind of people who already own homes from moving and giving up their lower-cost mortgages. So it's been a real drag on the housing market. Powell says there's not a whole lot the Fed can do, although once the central bank does lower short-term rates, Powell says that should indirectly help to bring mortgage rates down as well.
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JEROME POWELL: I don't know when that'll happen. And even when it does happen, we're still going to have a housing shortage in many places.
HORSLEY: Ultimately, the U.S. just needs to build more houses. And, of course, that's going to depend in part on land use policy and labor cost and the cost of building materials.
CHANG: Exactly. So how would the new administration's policies play into all of that?
HORSLEY: President Trump's trade and immigration policies have the potential to raise the cost of building materials and the cost of construction labor. Powell generally sidestepped questions about trade policy today, saying that's for Congress and the White House to work out. He did answer a question from Senator Jack Reed though about some of the new President's personnel moves.
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JACK REED: Just this weekend, the president removed the board of the Kennedy Center and made himself chairman. What would you do if the president tried to remove a member of the Federal Reserve Board?
POWELL: Well, it's pretty clearly not allowed under the law.
HORSLEY: Right now, there are no vacancies on the Fed Board. So Trump's power to reshape the central bank is limited. He will get a chance down the road, though. For example, Powell's own term as Fed chairman ends in just a little over a year.
CHANG: OK. Well, in addition to setting interest rates, the Fed also helps regulate banks, right? So how do lawmakers think that's going right now?
HORSLEY: Yeah, the Fed got some criticism today from Republicans who complained that bank regulators have discouraged banks from working with certain kinds of businesses, in particular crypto businesses, which were somewhat out of favor in the last administration and are getting a much warmer welcome in Washington today. Senator Tim Scott, who chairs the Banking Committee, says businesses' access to bank services should not depend on which way the political winds are blowing.
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TIM SCOTT: If it's legal in America to do business, we should do our part to make sure that they're banked.
HORSLEY: Powell says the Fed is taking a fresh look at its bank supervision manual. Now, most bank regulation is designed to ensure the safety and soundness of the financial system, but there is one bank regulator that was set up to look out for consumers. And that's the Consumer Financial Protection Bureau. It was the brainchild of now-Senator Elizabeth Warren after the financial meltdown 15 years ago. And she's furious that the Trump administration has effectively shut the Consumer Bureau down.
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ELIZABETH WARREN: No more cop on the beat looking out for your grandma whose bank account has just been taken over by a scammer. No more cop on the beat looking out for people getting ripped off by giant credit card companies that are charging illegal junk fees.
HORSLEY: Warren urged Powell not to be an accomplice to that shutdown. And the Fed does have a bit role here because it actually funds the Consumer Bureau. It was set up that way to prevent congressional meddling.
CHANG: That is NPR's Scott Horsley. Thank you, Scott.
HORSLEY: You're welcome. Transcript provided by NPR, Copyright NPR.
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