Trump seeks to ease credit while clashing with the Fed

The administration has proposed a cap on credit card rates and ordered $200 billion of mortgage bond purchases to lower borrowing costs, while Federal Reserve chair Jerome Powell warned such steps could undermine the central bank's independence.

President Donald Trump's administration has taken steps intended to reduce borrowing costs, including a proposed cap on credit card rates and an order to buy $200 billion of mortgage bonds. Federal Reserve chair Jerome Powell described these actions as a pretext that could weaken the central bank's independence. The administration has signalled dissatisfaction with the Fed's pace on interest-rate cuts and is using regulation and Treasury actions to try to ease credit. These moves come as the economy is growing above 4 percent and inflation remains above the Fed's target. Key facts: - The administration has proposed a one-year cap on credit card rates and ordered $200 billion in mortgage bond purchases to lower borrowing costs. - Fed chair Jerome Powell said these actions could be a pretext for weakening the Fed's independence. - The economy is tracking annualized growth above 4 percent and inflation is reported to be above the Fed's target, prompting concern about further easing. Summary: The administration's actions seek to loosen credit conditions now while creating a policy divide with the Federal Reserve. Observers say this raises questions about the central bank's credibility and the risk of renewed inflationary pressure. Undetermined at this time.