Sen. Dave McCormick, R-Pa., discusses President Donald Trump’s renewed threats to fire Federal Reserve Chairman Jerome Powell and Kevin Warsh’s upcoming confirmation hearing on “Kudlow.”
When it comes to what Americans can afford, no institution looms larger than the Federal Reserve.
The country’s central bank does not directly set the price of groceries, cars or houses. But it does affect how expensive it is to borrow money – and that can make a significant difference in what families pay each month.
Borrowing is currently expensive. High interest rates means higher monthly payments on mortgages, car loans and credit cards, even if the price of a house or vehicle has not changed.
For many Americans, that’s why life can still feel unaffordable even as inflation has cooled. Prices may not rise as quickly, but financing large purchases remains expensive.
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A pedestrian passes the Marriner S. Eccles Federal Reserve Building in Washington, DC (Nathan Howard/Bloomberg via Getty Images)
This tension is especially visible in the housing and car markets, two of the largest expenditure items for most households. A house or car may cost about the same as it did a year ago, but the loan associated with it can add hundreds of dollars to the monthly bill. In many cases, consumers do not pay more because ownership itself has become more expensive, but because borrowing has become more expensive.
This background has become a political liability for the president Donald Trumpwhich campaigned on restoring affordability and easing household financial pressures, but now faces growing skepticism among voters about whether that relief will materialize ahead of the midterm election cycle.
The issue will take center stage on Tuesday when Kevin Warsh, Trump’s nominee to lead the Fed, faces a confirmation hearing in the Senate.
Adding to the uncertainty, says Sen. Thom Tillis, R-N.C. has signaled he may not support Warsh’s appointment to the committee unless the Justice Department drops its investigation into Chairman Jerome Powell.
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Senator Thom Tillis has previously said he will not vote to confirm Kevin Warsh amid the DOJ investigation into Federal Reserve Chairman Jerome Powell. (Kevin Dietsch/Getty Images)
Warsh’s potential rise would come at a turbulent time for the institution. The pressure comes from several fronts: the Ministry of Justice is pursuing a criminal investigation involving Powell, the Supreme Court is weighing the limits of the Fed’s independence, and rising costs are testing Trump’s promise on affordability — raising the stakes for the next chairman.
All told, what started as tension over interest rate policy has since expanded into a broader confrontation, marking one of the most challenging periods of Powell’s tenure leading the Fed.
Trump has repeatedly pushed for lower interest rates, accuse Powell for not cutting spending more aggressively, even as he continues to tout a strong economy. Powell will complete his term next month after eight years at the helm of the central bank.
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President Donald Trump speaks with Fed Chairman Jerome Powell during a tour of the Federal Reserve in Washington, DC, Thursday, July 24, 2025. (Official White House photo by Daniel Torok)
If Trump was already keen on an interest rate cut, tensions with Iran could further complicate the picture. Rising oil prices have revived concerns about inflation, potentially giving Fed officials another reason to remain cautious.
If the conflict with Iran If energy costs persist and energy costs remain high, this could cloud the prospects for future cuts – potentially limiting the speed at which Warsh could move to lower interest rates and prolonging the period of high borrowing costs that have kept household budgets under pressure.
