Trump says US interest rates should be 1% or lower

Summary

Donald Trump stated on Wednesday that U.S. interest rates should be slashed to 1% or lower, urging the Federal Reserve to act quickly Reuters. He justified this by citing the U.S.'s superior credit status and suggesting that eliminating trade deficits could generate $1.5 trillion annually . This follows his previous calls for rates to sit between 0.5% and 1% .

Impact Analysis

So, he’s doubling down on the ‘1% or lower’ narrative, and we shouldn’t dismiss this as just noise Reuters. He’s essentially signaling a blueprint for a high-tariff, ultra-low-rate regime. By linking rate cuts to his $1.5 trillion trade deficit argument, he’s preparing to use cheap credit as a cushion for the inflationary shock of protectionism .

If the market starts pricing in a compromised Fed, the long end of the curve is going to get ugly—expect massive steepening. The real signal here is the total disregard for traditional inflation targeting. If he gets his way, the Net Interest Margins (NIM) for banks will be absolutely gutted at a 1% handle. Bottom line: this is a massive tailwind for gold and hard assets as a hedge against currency debasement. I’d be wary of long-duration Treasuries here; the inflation risk if the Fed buckles is being underpriced. We need to watch the USD closely—this is a ‘weak dollar’ policy in all but name.