Rent inflation has made the Fed's job tricky

Summary

Marketplace Morning Report: "Rent Inflation Has Made the Fed's Job Tricky"

Date: August 21, 2025
Host: David Brancaccio
Key Contributors: Mitchell Hartman, Stacey Marie Ishmael

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Episode Overview

This episode of Marketplace Morning Report explores two pressing economic topics:

1. How rent inflation remains a confounding issue for the Federal Reserve, complicating its efforts to manage the economy.
2. The growing role of stablecoins in the financial sector, including the possibility of their integration into mainstream banking, amidst regulatory and practical debates.

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Key Discussion Points & Insights

1. The Puzzle of Rent Inflation and Federal Reserve Policy

Segment Start: 00:31

• Jackson Hole Symposium:
  The annual gathering of global central bankers in Jackson Hole, Wyoming kicks off, with much anticipation around Fed Chair Jerome Powell’s upcoming remarks on interest rates, employment, and inflation.
• Stubborn Rent Inflation:
  • Mitchell Hartman explains that while inflation has moderated post-pandemic, rent growth remains persistently high—outpacing other cost reductions.
  • Boaz Abramson, a finance professor at Columbia Business School, highlights a surprising finding: higher interest rates, expected to cool rents, are actually making things worse.
    • When mortgage rates rise, fewer people can afford to buy homes, so more prospective homebuyers remain in the rental market, intensifying competition for available rentals.
• Low-Income Households Hit Hard:
  • The inability for first-time buyers to transition to homeownership keeps pressure on rent prices, disproportionately affecting low-income populations.
• Recent Changes in Rental Market:
  • David Brancaccio reports with data from Zumper, an online rental platform, which found both one- and two-bedroom rents decreased year-over-year for the first time since February 2016 ([02:10]).
    • The nationwide decline in average rents accelerated as of July.

Notable Quotes:

• "Higher interest rates should have suppressed demand for goods and services, keeping a lid on rent increases." — Mitchell Hartman [00:59]
• "Bottom line, higher interest rates pushed rents higher, but now interest rates have dropped a bit and we do see that rent inflation has somewhat dropped." — David Brancaccio [01:47]
• "The first time since February 2016 we've been flat or declining across the board." — David Brancaccio, relaying Zumper's data [02:10]

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2. Fed Governor Lisa Cook Controversy

Segment Start: 02:24

• President Trump calls for Federal Reserve Governor Lisa Cook to resign over a past mortgage, but Cook firmly responds she will not be "bullied to step down" and will provide accurate information on her finances ([02:24]).

Notable Quote:

• "I have no intention of being bullied to step down from my position because of some questions raised in a tweet." — Lisa Cook (read by Brancaccio) [02:24]

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3. Stablecoins and the Future of US Banking

Segment Start: 04:08

• Stablecoins Defined:

  • David Brancaccio introduces Stacey Marie Ishmael, Executive Editor of Crypto and Digital Payments at Bloomberg News, to discuss the rise of stablecoins—cryptocurrencies pegged to the US dollar and designed not to fluctuate.

• Use Cases for Stablecoins:

  • Ishmael explains stablecoins are attractive for those needing to avoid currency fluctuation, especially for remittances (money sent overseas). Stablecoin transactions are often faster and less costly than traditional wire transfers ([05:28]).
  • PayPal and other major apps are integrating stablecoins for quick, sometimes instantaneous, payments.

• Big Banks Eye Integration:

  • Major US banks are exploring allowing customers to hold stablecoins in regular checking/savings accounts, influenced by a crypto-friendly regulatory shift.
  • Ishmael notes this is still in the proposal stage; no banks currently offer it ([06:35]).

• Regulatory and Insurance Challenges:

  • There is intense debate about whether the FDIC or other government insurance would (or should) cover losses in crypto accounts.
  • Ishmael points out the greater risks in crypto, compared to banked US dollars, and the lack of regulatory consensus ([07:18]).

Notable Quotes:

• "Stablecoins are designed to stay steady at a given level. And for people who... want to avoid currency fluctuations or who want to have access to the US dollar, this is really attractive." — Stacey Marie Ishmael [04:50]
• "The argument made... is that the fees are a lot lower if you do it via stablecoin, that it’s increasingly integrated into popular apps. So in the US... PayPal has its own version of a stablecoin and it’s pretty quick. In some cases it's instantaneous." — Stacey Marie Ishmael [05:41]
• "Nobody is doing that at the moment, but it's certainly one of the things being discussed..." — Stacey Marie Ishmael on banks integrating stablecoins [06:35]
• "Saying that the US government will bail you out if something terrible happens to your crypto account is... something they’re still trying to get their heads around." — Stacey Marie Ishmael [07:18]

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Memorable Moments & Timestamps

| Timestamp | Topic/Moment | |---------------|----------------------------------------------------------------| | 00:31 | Jackson Hole meeting and Fed Chair’s anticipated speech | | 01:28 | Higher interest rates paradoxically pushing rents higher | | 02:10 | Nationwide rents drop for first time since 2016 (Zumper data) | | 02:24 | Lisa Cook's firm response to resignation calls | | 04:08 | Introduction to stablecoins and crypto in mainstream banking | | 05:28 | Advantages of stablecoins for remittances | | 06:35 | Big banks' potential integration of stablecoins | | 07:18 | Debate over deposit insurance for crypto accounts |

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Tone & Style

The conversation is brisk, accessible, and informative—characteristic of Marketplace’s mission to demystify complex economic issues. Brancaccio’s style is probing yet conversational, allowing for clear explanations from his expert guests.

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Summary for Listeners

This episode unpacks why controlling rent inflation is so difficult for the Fed, revealing the unintended consequences of higher interest rates for the rental market. It spotlights the first national rent decreases in almost a decade, a moderating trend that could have far-reaching implications. The episode then turns to fintech innovation, breaking down stablecoins and the real-world advantages—and regulatory headaches—of integrating crypto with conventional banking. Finally, it touches on political friction at the Fed, exemplifying the challenges facing financial leadership today.

This brief, content-rich edition is ideal for those seeking a compact, nuanced overview of today’s headline economic issues.

Transcript

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[David Brancaccio]

The word from the Wyoming Mountains on Interest Rates I'm David Brancaccio in Los Angeles. It is like a summertime super bowl for people focused on the economy. The big meeting of central bankers kicks off today in Jackson Hole, Wyoming. Federal Reserve chair Jerome Powell is set to speak tomorrow and will be watching for hints about borrowing jobs and inflation marketplaces. Mitchell Hartman has this look at one tricky part of that equation, the cost of rent.

[Mitchell Hartman]

When prices started shooting up in the pandemic, rents followed suit, peaking at nearly 9% inflation year over year. Rent increases have moderated since then, but less than prices overall. Higher interest rates should have suppressed demand for goods and services, keeping a lid on rent increases. Columbia Business School finance professor Boaz Abramson went looking for a reason rent inflation was so stubbornly high. And here's what he Higher interest rates.

[David Brancaccio]

Get reflected in higher mortgage costs and.

[Mitchell Hartman]

That prevents people from becoming homeowners. Those folks stay in rental housing competing with other renters, low income households.

[David Brancaccio]

They are impacted by the fact that.

[Mitchell Hartman]

First time buyers remain in the rental.

[David Brancaccio]

Market and overall increased demand.

[Mitchell Hartman]

Bottom line, higher interest rates pushed rents higher, but now interest rates have dropped.

[David Brancaccio]

A bit and we do see that rent inflation has somewhat dropped.

[Mitchell Hartman]

Online housing site Zumper tracks rents currently being asked in the market and as of July, says Tongi Luluwarn, its national rental index showed year over year, both.

[David Brancaccio]

One and two bed rents were down, the first time since February 2016 we've been flat or declining across the board.

[Mitchell Hartman]

And he says the fall in average nationwide rents accelerated this month. I'm Mitchell Hartman for Marketplace.

[David Brancaccio]

We're also covering President Trump's latest salvo aimed at a member of the Federal Reserve. He's called for Fed Governor Lisa Cook to resign, pointing to something about a mortgage she once took out. Cook has now responded, quote, I have no intention of being bullied to step down from my position because of some questions raised in a tweet. She said she's gonna gather accurate information on her financial history to answer any legit more in the Morning Report podcast feed if you miss it on the air.

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[David Brancaccio]

Given Crypto Friendly Washington, the biggest of US banks are considering ways you might be able to put a crypto contraption called stablecoin in next to your checking or savings account. But does the word stable mean stable? As part of our ongoing coverage of the crypto shift emerging, let's turn to Stacey Marie Ishmael, Executive Editor of Crypto and Digital Payments at Bloomberg News. Great to have you back.

[Stacey Marie Ishmael]

A pleasure to be here.

[David Brancaccio]

So stablecoin. It's a genre of cryptocurrency that's hard pegged to the dollar. Not supposed to fluctuate other than sounding crypto cool, this is gonna be a hard question. Stacey Marie does stablecoin do anything for anyone?

[Stacey Marie Ishmael]

Well, the clue is in what you said about it being pegged to the US dollar. A lot of other cryptocurrencies, famously Bitcoin for example, move a lot 5%, 8%, 10% in a day. Stablecoins are designed to stay steady at a given level. And for people who for example want to avoid currency fluctuations or who want to have access to the US dollar, this is really attractive. So right now I would say the most popular consumer facing real world use case is things like rem. So for folks who want to send money overseas, that's a big use case for stablecoins right now.

[David Brancaccio]

Well, let me just put it another way. If you want to buy an egg salad sandwich, you could use four dollar bills. But why stablecoins at all? Let's say you wanted to do a remittance from a foreign country just use a dollar.

[Stacey Marie Ishmael]

Well, not everybody has easy access to dollars. And the argument made by some of the folks that are trying to, I would say, innovate within stablecoins and remittances is one that the fees are a lot lower if you do it via stablecoin, that it's increasingly integrated into popular apps. So in the US for example, PayPal has its own version of a stablecoin and it's pretty quick. In some cases it's instantaneous, whereas for more traditional forms of remittances, you can be looking at like, you know, 48 hours to up to five days in some cases.

[David Brancaccio]

Now, you and I are talking at a moment when the biggest banks in the universe, including bank of America, Citigroup, among others, based on changes brought about by the crypto friendly Trump administration, are thinking about allowing stablecoin into regular accounts. Like part of your regular bank account might include stablecoin.

[Stacey Marie Ishmael]

The keyword there is might. Nobody is doing that at the moment, but it's certainly one of the things being discussed because again, the idea, you know, being pitched by these crypto companies is that they want this to be another accessible form of money in the same way that the dollar is. And for that to actually be true, you do need a way in the like, retail branch banking or online banking context to have this show up next to your accounts. And there is quite a lot of lobbying happening by various, you know, bank lobby groups to help make this possible.

[David Brancaccio]

We should be clear. Do you imagine a universe in the United States where federal deposit insur would cover a crypto account?

[Stacey Marie Ishmael]

That is one of the more, I would say, contentious discussions now. I mean, we are actively in a regulatory environment in which you're getting the feedback that, you know, crypto should be showing up in people's retirement accounts. And it's something that everybody should be exposed to and investing in, but the regulators themselves are, you know, looking at the risks because this is unlike the US Dollar general, generally a more risky asset. And so saying that the US Government will bail you out if something terrible happens to your crypto account is for a lot of people, something they're still trying to get their heads around about how that would work mechanically.

[David Brancaccio]

Stacey Marie Ishmael is executive editor of Crypto and Digital Payments at Bloomberg News. Thank you so much for the briefing.

[Stacey Marie Ishmael]

Thanks for having me.

[David Brancaccio]

And in Los Angeles, I'm David Brancaccio. This is the Marketplace Morning Report from APM American Public Media.

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