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April 28, 2025

Why Trump's call for the Fed to cut interest rates may not help consumers

By CHRISTOPHER RUGABER
AP Economics Writer

President Donald Trump is badgering the Federal Reserve to cut interest rates, but even if the Fed gave in to the pressure, it wouldn't necessarily lead to lower borrowing costs for consumers.

In fact, economists say, Trump's ongoing attacks on Fed Chair Jerome Powell and his tariff policies could keep the longer-term interest rates that matter for consumers and businesses higher than they otherwise would be. A less-independent Fed can lead, over time, to higher borrowing costs, as investors worry that inflation may spike in the future. As a result they demand higher yields to own Treasury securities.


 
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