America, this isn’t how you lower interest rates

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.