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Trump and Interest Rates: A Complex Equation
Analysis of Donald Trump's ability to influence interest rates, considering the complexities of the Federal Reserve and market factors.
English
United States
PoliticsUs PoliticsInflationFinancePolicyEconomics
Federal ReserveWharton SchoolRealtor.comChicago Economic ClubKey Square
Donald TrumpJerome PowellKent SmettersRalph MclaughlinScott Bessent
- How much control does the president have over interest rates?
- Trump's campaign promise to lower interest rates is a complex issue, as rates are primarily determined by market factors beyond presidential control, although presidential policies can influence them.
- What are some long-term strategies for lowering interest rates?
- Lowering interest rates requires controlling inflation and reducing the U.S. deficit to improve the bond market's view of the country's long-term stability and reduce long-term risks.
- How does the Federal Reserve influence interest rates, and what are its limitations?
- The Federal Reserve's influence on interest rates is indirect; while it sets short-term rates, long-term rates like mortgages are largely shaped by bond market dynamics and investor sentiment.
- What strategies might Trump use to influence interest rates beyond his direct control over the Fed?
- While Trump can't directly control the Federal Reserve's actions, his rhetoric and potential appointments could influence rate decisions; he could appoint a new Fed chair in 2026.
- How could Trump's policies impact interest rates, and what is the relationship between inflation and rates?
- Trump's proposed policies, like tariffs and tax cuts, could contribute to higher inflation, indirectly leading to higher interest rates; controlling inflation is key to lowering long-term rates.