President Donald Trump is making progress on his efforts to reshape the central bank’s makeup to his liking, raising concerns over the Fed's independence amid the White House's push for aggressive rate cuts.

Trump's ire with the Fed stems in part from his belief that holding off on rate cuts is keeping mortgage rates high and pricing out too many Americans from buying homes – something he describes as a blight on an otherwise “phenomenal” economy.

After months of badgering Fed Chair Jerome Powell to lower rates, his feud with the Fed escalated on Aug. 25 when he announced the termination of Fed Governor Lisa Cook, potentially paving the way for his appointees to make up a majority of the Fed’s seven-person board of governors. Cook is challenging the move in court.

“We'll have a majority very shortly. So that'll be great. Once we have a majority, housing is going to swing,\\" Trump said during an Aug. 26 Cabinet meeting.

Experts say there’s growing evidence to support lower interest rates but warn that cutting rates too fast, too soon could spur inflation and drive up mortgage prices even further.

“We think any moves will be slow, gradual, cautious,” said John Canavan, lead analyst at Oxford Economics.

The Fed is tasked with a dual mandate to keep inflation low and unemployment rates high. If the labor market is weak, the central bank can lower its key interest rates to spur economic activity and promote hiring. When inflation is running hot, it can raise rates to slow economic activity.

For months, the Fed has kept rates steady amid inflation concerns. While the economy has held up better than many anticipated in the wake of the COVID-19 pandemic and Trump's tariffs, inflation continues to run above the Fed’s 2% target, and there are concerns that tariffs could drive prices higher.

But recent cracks in the labor market have the Fed looking more closely at rate cuts. The latest jobs report found U.S. employers added 73,000 jobs in July, well below economists' expectations, while job gains for May and June were revised down by 258,000.

Powell on Aug. 22 signaled the Fed was open to a rate cut this September, noting the downside risk to employment is rising, even if inflation remains “somewhat elevated.”

While Trump wants rate cuts, he appears to disagree with the Fed on why the timing is right, said Paul Ashworth, chief North America economist for Capital Economics. Trump in August ordered the firing of the U.S. commissioner of Labor Statistics after the weak jobs report, accusing her without evidence of manipulating data.

“Rather than weak demand, the Republican case for lower interest rates often focuses on the perceived boost to the economy’s supply side from deregulation, tax cuts, etc.,” Ashworth said in an emailed statement. “In that world, you can cut rates even if the economy is booming because inflation could, in theory, still fall too.”

Trump has argued that lower interest rates will save the government money and boost the U.S. housing market.

“Could somebody please inform Jerome 'Too Late' Powell that he is hurting the Housing Industry, very badly?” Trump wrote Aug. 19 on Truth Social. “People can’t get a Mortgage because of him.”

But Carola Binder, an economic historian and associate professor of economics at the University of Texas at Austin, said the housing market isn’t the Fed’s priority.

“To the extent that they’re impacting price stability, then the Fed would take (housing prices) into account,” Binder said. “But they don’t have a third mandate to boost the housing market or stabilize the housing market.”

It’s also worth noting that while the Fed can influence mortgage rates, but its rate cuts won’t always lead to cheaper home loans. Mortgage rates tend to follow the path of the 10-year U.S. Treasury note, not the banking rates set by the Fed.

Oxford Economics expects the Fed to drop its key interest rate, currently at a range of 4.25% to 4.5%, 25 basis points in September, with the potential for another 25 basis point rate cut to follow in December. 

It’s unclear whether this pace would satisfy Trump, who has pushed for an accelerated drop to rates as low as 1%.

Powell “could do the biggest and best job for our Country by helping to lower Interest Rates,” Trump said in June on Truth Social. “We have virtually No Inflation, our Economy is doing really well, and will soon be doing, with the tremendous Tariff Income coming in, and Factories being built all over the Country, better than it has ever done before.”

The following month, Trump said the Fed should cut rates by three points. \\"Bring down the Fed Rate, NOW!!!\\" he said on Truth Social.

But economists warn that dramatic rate cuts could do more harm than good for consumers.

Rapid cuts could signal the Fed is losing autonomy and spur concerns over inflation and economic uncertainty – particularly among those who invest in 10-year Treasury bonds. This could prompt investors to demand higher rates when lending the government money, driving up the 10-year Treasury yield.

Canavan said those hikes would bleed through into mortgages, auto loans and other consumer loans.

“The net result for the economy, of a more aggressive Fed rate cut, would probably be negative because of the impact on the long end of the curve,” Canavan said. It could “have the opposite effect on long-term rates than what’s desired.”

Binder emphasized that we have yet to see the Fed cede control to the president. If Trump is able to enforce rapid rate cuts, though, she would expect to see higher inflation and a weaker dollar as confidence in the Fed’s independence erodes.

Trump on Aug. 25 said he was firing Cook, who was nominated by former President Joe Biden in 2022.  Cook’s termination – if accepted by the courts – could pave way for Trump's appointees to make up the majority of the seven-member board of governors.

Two Fed governors, Christopher Waller and Michelle Bowman, were appointed by Trump during his first administration, and dissented from the Fed’s July decision to keep interest rates steady. Trump is also working to fill an empty seat left by Governor Adriana Kugler, who unexpectedly stepped down in August.

“Once we have a majority, housing is going to swing and it's going to be great,\\" Trump said on Aug. 26. “People are paying too high an interest rate. That's the only problem with housing. We have to get the rates down a little bit, and when we do, it's going to be a tremendous difference.\\"

It’ll take more than a majority among the board of governors to control interest rates, though. Rate cuts are decided by the Federal Open Market Committee, a 12-person committee comprised of the seven Fed board members, plus five regional Reserve Bank presidents.

Unlike governors, regional presidents are not nominated by the president. But a recent note from Deutsche Bank Research noted that every five years, the Fed’s regional bank presidents must be reaffirmed by the board of governors. The next vote is slated for the first quarter of 2026; theoretically, the majority of governors could refuse to approve regional presidents who aren’t in favor of rate cuts.

It’s not clear that Fed governors would go along with such a plan, though. And Deutsche Bank’s U.S. economists don't anticipate a shift in near-term policy from the Fed, as Cook was already one of the most dovish Fed officials, meaning she generally supports lower interest rates.

The Fed is scheduled to meet again in mid-September. It’s not yet clear if Cook will have a role in that meeting.

A lawsuit from Cook asks the court to rule Trump’s firing announcement as “unlawful and void” so Cook can remain an active member of the board. Cook is also asking for an immediate temporary restraining order that prevents the implementation of Trump's firing announcement, arguing that it was unlawful and would jeopardize the Fed's independence.

Cornell law professor Robert Hockett expects the court to act quickly on the restraining order request, and believes there's a good chance Cook can take part in the Fed's Sept. 16-17 meeting. U.S. District Judge Jia Cobb scheduled a 10 a.m. hearing on Aug. 29 to determine whether to block Trump's action temporarily while the case is litigated.

\\"The right thing to do here would be to simply proceed as though Trump didn't exist, or this event had not occurred, and to carry on with business as it always would do with Cook fully on board,\\" Hockett said.

An Aug. 26 statement from the Fed did not indicate that it would ignore the president’s move to fire Cook, only that it would “abide by any court decision.”

Contributing: Bart Jansen, USA TODAY

This article originally appeared on USA TODAY: Trump wants Fed rate cuts. What it could mean for you.