President Donald Trump has blamed Federal Reserve Chair Jerome Powell for “hundreds of billions of dollars” in interest costs, claiming the Fed should lower interest rates to reduce debt burden. However, experts say cutting interest rates may not significantly lighten the nation’s interest payment burden.
The US is nearing $1 trillion in interest payments for the first time in history, with this fiscal year’s payments expected to reach $952 billion. Trump recently signed a bill adding over $3 trillion to the deficit over the next decade, which could push interest rates higher.
Despite potential cuts to interest rates, experts say it may not have a significant impact on reducing the nation’s debt burden. The federal funds rate influences only one aspect of interest rates, and shorter-term securities are more likely to be affected. A sharp rate cut could even increase longer-term rates due to inflation concerns or investor shifts.
Experts suggest that if Trump wants to reduce interest payments, he should focus on lowering the annual deficit. However, this would require implementing policies with tax and spending changes, which may be politically challenging.
The Bipartisan Policy Center’s Shai Akabas notes that cutting the federal funds rate seems like an easier solution, but it doesn’t guarantee a desired outcome. The Committee for a Responsible Federal Budget’s Marc Goldwein adds that enacting deficit-reducing policies would be more effective in addressing interest costs.
Source: https://edition.cnn.com/2025/07/19/business/powell-trump-interest-rates-fed