America, this isn’t how you lower interest rates
If US officials really want to get interest rates down, they have superior options – including discarding policies that push in the wrong direction
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THE US’ leaders have latched onto the idea that they can address some big problems – most notably a gaping budget deficit – by forcing interest rates downward.
If only it were that easy.
US President Donald Trump keeps turning up the pressure on the Federal Reserve to lower short-term rates, publicly expressing his dissatisfaction with chair Jerome Powell. Treasury Secretary Scott Bessent wants to reduce longer-term rates by issuing less long-term US debt. Financial regulators are tweaking capital requirements, encouraging the largest US banks to buy and hold more Treasury securities, which would push prices up and yields down.
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