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But time for easier credit to make a difference to voters in a midterm election year is running thin.

Awaiting a more compliant Fed, the administration appears hell-bent on using a mix of regulation and Treasury cash to cut credit card bills and mortgage rates further.

The efficacy of these moves is still unclear – with some fearing a credit card rate cap at 10% for a year may backfire by forcing card firms to pull credit lines from lower-rated borrowers altogether.

But the direction of government credit policy – to the extent that it now has one distinct from, and ‌in places at odds with the Fed – seems clear. Perhaps most important for Trump is the political optics of being seen to try.

But popularity alone does not make for sound economic policy in the long run.

EASING BY DECREE

Near-term, there’s a reasonable worry that any further policy easing moves right now are unjustified. Financial conditions are already very loose, the economy is tracking annualized growth in excess of 4% through the end of last year, and inflation is settling above the Fed’s target.

Fed policy as it stands presumably includes an assumption about prevailing credit card rates and the impact of rolling mortgage bonds off its balance sheet. If the administration effectively eases both of those conditions, a new ⁠question about the appropriate Fed policy rate may well be raised internally.

After all, the push to soften monetary conditions even further this year comes just as last summer’s fiscal boost of tax cuts and spending kicks in fully through early 2026.

By that logic, any further cuts – especially any seen to be politically influenced – may just build a case for harsher tightening, whether the Fed would be “allowed” to do that eventually or not.

“Rather than pushing for rate cuts, the economic environment by the middle of this year could shift the debate such that the ⁠next Fed chair is likely to be resisting ⁠calls for higher interest rates,” wrote Fed watcher ​Tim Duy at SGH Macro Advisors. “Failure to resist those calls, or to even cut rates further as is currently sought by Trump, would be the classic policy error of a central bank stripped of its independence.”

“The Fed needs to have merely an open mind. The open-mind maestro, former Fed Chairman Alan Greenspan, resisted premature rate hikes during the technology boom of the 1990s — and history proved him right.”

While history may have proven him right about making space for the internet to ​thrive, it also records how that stance allowed one of the biggest stock market bubbles and busts to unfold over the turn of ‍the new millennium.

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