US President Donald Trump has renewed his call for significantly lower interest rates, saying the country’s benchmark rate should be around 1% or even 0.5%.
Trump made the comments as he argued that the United States should have some of the lowest borrowing costs in the world. He said lower rates would reduce the cost of servicing government debt and support economic activity.
“We should be at one percent or a half a percent,” Trump said, according to a transcript of his remarks. He argued that the US should not be paying rates near 4% while some other countries have much lower borrowing costs.
His comments came on the same day the Federal Reserve raised its benchmark interest rate by 0.25 percentage points, taking the target range to 3.75%–4%. The decision marked the Fed’s first rate increase since 2023.
The Federal Reserve has maintained that interest-rate decisions are guided by economic conditions, particularly inflation and employment. Fed Chair Kevin Warsh said persistent inflation remains a concern and indicated that further policy tightening could be considered.
Trump has repeatedly argued that lower rates would make borrowing cheaper for households and businesses while reducing the government's interest costs. He has also linked lower borrowing costs to stronger economic growth.
The gap between Trump's preferred rate and the Fed's current policy rate highlights the continuing disagreement over the appropriate direction of US monetary policy. While the president has called for cuts, policymakers have recently focused on controlling inflation.
The Fed's latest projections indicate that policymakers expect the federal funds rate to remain above Trump's preferred level through the end of 2026, although future decisions will depend on incoming economic data and inflation trends.
For consumers and businesses, changes in the federal funds rate can influence borrowing costs, including rates on loans, credit products and other forms of financing, although the effect varies across the economy.