President Donald Trump indicated Wednesday that the Federal Reserve will cut interest rates in September after the central bank earlier in the day decided to maintain its baseline rate from 4.25% to 4.5%.
The Fed has not cut interest rates since December, and Trump has been fiercely critical of Chair Jerome Powell and the central bank's desire to keep the status quo despite low inflation and a strong economic outlook. Powell has stated the Fed is being cautious because of uncertainty over Trump's tariff policies.
After signing the VA Home Loan Program Reform Act, legislation that provides a safety net for home-owning veterans who have fallen on hard times, Trump was asked what he would say to economic analysts who fear that lowering interest rates could lead to higher inflation. The event, which aired live on Newsmax and the Newsmax2 online streaming platform, took place before the Fed announced it was holding its baseline rate steady.
"Well, if that happens, then we just raise them," Trump said. "What you do is you lower them and let's see if there's inflation. Right now, there's no inflation. Everybody thought there would be. All we have is billions of dollars of cash pouring into our country from other countries that took advantage of us for many, many years.
"So, if that happens, what you do is you raise your rates and you do what you have to do to stop inflation. But we're keeping the rates high and it's hurting people from buying houses. And we don't want that. If for any reason that happened in a year or two, if there's some signs of inflation coming back right now, there's not. We have a great thing going. I think we're going to have the richest economy you've ever seen. We have money coming in that we've never even thought about at numbers that nobody's ever seen before."
Trump hammered home another point about how the high rates are costing the federal government billions of dollars a year regarding interest on the national debt.
"You know, each point that this gentleman [Powell] keeps up costs us $365 billion a year," Trump said. "Think of that, 1 [percentage] point, $365 billion. If you bring it down a point, we save 365. We should [have] the lowest interest rate. And we're not. We're 38. No. 38 because of the Fed. It's all because of the Fed. He's done a bad job. Now he's got a meeting today, but I call him 'too late.' You know, he's always too late. Even if he does it today, probably won't. I hear they're going to do it in September. Not today. For what reason? Nobody knows.
"But Europe, as you know, cut their rates 11 times in the last short period of time. But the good news is, we're doing better than anybody, anywhere in the world. Nobody's doing anything even close to us. Even with the higher rates. The higher rates do affect housing, though, because people can't go out and get a loan or refinance their house, and it would be nice to have them be able to do that. That would be just another check of a box that would be very important."
Michael Katz ✉
Michael Katz is a Newsmax reporter with more than 30 years of experience reporting and editing on news, culture, and politics.
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