U.S. President Donald Trump could increase national interest costs by nearly $60 billion if he fires Fed Chairman Jerome Powell.
The change in leadership at the Federal Reserve will push U.S. Treasury bond yields higher, increasing the burden of the government's interest costs amid rising inflation and political instability.
MAIN CONTENT
The firing of Powell could lead to a significant rise in long-term Treasury bond yields, adding nearly $60 billion per year in interest costs.
Experts warn that the market will lose faith in the Fed's ability to control inflation if it is politically interfered with.
Rising interest costs will impact the macroeconomy, slow the real estate market, and create high political-financial instability.
How would the firing of Fed Chairman Jerome Powell affect U.S. interest costs?
TD Securities expert Gennadiy Goldberg estimates that annual interest costs could increase by approximately $58 billion if Powell is fired. Long-term Treasury bond yields, such as 20- and 30-year bonds, are forecasted to rise by about 20-50 basis points, pushing rates close to 5.5%.
This data is based on the volume of bonds issued by the U.S. Treasury, approximately $276 billion in 30-year bonds and $168 billion in 20-year bonds each year. Goldberg warns that if yields rise sharply, the burden of public debt could become unsustainable.
The firing could cause the market to worry that the Fed will be influenced by political pressure rather than focusing on controlling inflation, increasing bond yields and government borrowing costs.
Gennadiy Goldberg – TD Securities Analyst, 2025
Market reactions and future bond yield scenarios
According to Alex Everett of Aberdeen Investment, in the next 2-3 months, the yield on 30-year bonds could rise by about 1 percentage point to nearly 6%, similar to the sharpest increases in the 1980s under Fed Chairman Paul Volcker.
This increase reflects market concerns about the Fed's ability to control inflation being undermined by political influence, rather than successfully stabilizing the economy.
"[The market will think] inflation will not be controlled by an institution that exists to regulate the economy."
Alex Everett – Aberdeen Fund Manager, 2025
What political and financial instabilities could arise from the change in Fed leadership?
The firing of Powell will not only affect interest rates but could also increase political instability risks and push U.S. fiscal policy towards a looser direction.
Alex Everett believes this will be a significant step in President Trump's agenda, potentially leading the government to push for broader fiscal policies.
At the same time, the rise in bond yields will weaken the value of the USD and negatively affect investors.
According to the U.S. Federal Budget Committee, interest costs currently account for about 3.2% of the federal budget but could rise to 6.1% by 2054 if Trump's budget proposals are approved.
Higher interest rates will increase mortgage rates, slowing the U.S. real estate market and posing a potential severe decline in the last three decades.
Frequently Asked Questions
How specifically does the firing of the Fed Chairman affect the U.S. economy?
This increases government bond yields, making borrowing more expensive, which in turn affects government spending and makes inflation harder to control (according to expert Gennadiy Goldberg).
Why are investors concerned that the Fed will lose independence if the Chairman is fired?
The independence of the Fed helps maintain stable monetary policy; if political influence interferes, investors will demand higher yields to compensate for political risk, leading to increased borrowing costs.
How does rising interest costs affect the public?
High interest costs will raise mortgage rates, making it difficult for borrowers and slowing the real estate market, directly impacting the social economy.
Will this change cause U.S. bond yields to soar once again?
Aberdeen experts estimate that the 30-year yield could increase by about 1 percentage point in the coming months, marking the largest increase since the early 1980s.
What financial pressures will the government face in the future?
Projected interest costs are expected to double the share of the federal budget, potentially making public debt difficult to control if fiscal policy is not tightened.
Source: https://tintucbitcoin.com/trump-chiu-them-60-ty-usd-lai-suat/
Thank you for reading this article!
Please Like, Comment, and Follow TinTucBitcoin to stay updated with the latest news on the cryptocurrency market and not miss any important information!
