FX.co ★ Trump Pressures Fed for Deep Rate Cut

President Donald Trump has called on the Federal Reserve to cut interest rates to 1%, asserting that such a reduction would lower federal borrowing costs and stimulate economic growth. "We need a 1% rate. The Fed is killing growth," he declared on Monday. The current federal funds rate is set between 5.25% and 5.50%, a level the Fed maintains to manage inflation and prevent the economy from overheating. Reducing the rate to 1% would be one of the most significant monetary easing actions since the COVID-19 pandemic. Trump's appeal comes amidst rising federal debt servicing costs, which are approaching historic levels. Although a lower interest rate might temporarily ease national debt interest payments, economists caution that it could destabilize the economy and reignite inflation. Reuters highlighted that while the reduction might provide short-term relief, it could also pose a risk of long-term financial instability.