To explain why Donald Trump needs low interest rates, we need to consider the economic, political context and his personal goals in his role as President of the United States (2017-2021). Trump often expressed support for low interest rates, especially in public statements and on social media like Twitter (now X), for reasons related to his economic strategy and political interests. Here is a detailed analysis:

1. Stimulating economic growth

Trump always promotes the image of a leader who brings economic prosperity to America, with the slogan “Make America Great Again” (MAGA). Low interest rates are a key tool to achieve this goal:

- Boosting investment and consumption: Low interest rates encourage businesses to borrow money to expand production and consumers to spend more (buying homes, cars, goods). This drives GDP growth – a metric Trump often uses to demonstrate economic success.

- Example: During his first term (2017-2021), Trump continuously pressured the Federal Reserve (Fed) and Chairman Jerome Powell to keep interest rates near 0% or even negative, especially after the COVID-19 pandemic began. He argued that low interest rates help the economy recover faster.

- Personal benefits: Trump, as a real estate entrepreneur before becoming president, understands that low interest rates increase asset values and boost the construction sector – a field in which he has experience and indirect interests.

2. Supporting the stock market

Trump often considers stock indices (such as Dow Jones, S&P 500) as a measure of success for his administration. He frequently boasted on Twitter when these indices peaked: - Mechanism: Low interest rates lead investors to shift from bonds (low yields) to stocks, pushing stock prices up. This creates a sense of “prosperity” for American voters.

- Example: In the period 2017-2019, when the Fed maintained low interest rates (1.5-2.5%), the Dow Jones rose from about 20,000 points to over 28,000 points. Trump often emphasized this as a personal achievement.

- Political motivation: In the current term, Trump may continue to want low interest rates to maintain the upward momentum of the stock market, reinforcing the confidence of voters and the business community.

3. Reducing national debt borrowing costs

The national debt of the United States increased significantly under Trump (from $19 trillion in 2017 to over $27 trillion in 2021), due to tax cuts and substantial spending during the pandemic. Low interest rates help reduce the burden of interest payments on this debt:

- Mechanism: With low interest rates, the cost of interest on U.S. Treasury bonds decreases, allowing the government to have more budget for programs that Trump favors (military, infrastructure, border wall).

- Example: In 2020, when the Fed lowered interest rates to near 0% in pandemic-era QE, the cost of servicing U.S. public debt decreased significantly compared to higher interest rates (like 3-4% previously).

- 2025 Goal: When Trump returns to power, he may want low interest rates to continue substantial spending without increasing fiscal pressure.

4. International competition and trade wars

Trump pursues an “America First” policy, including trade wars with China and other countries. Low interest rates are a strategic advantage:

- Weaken the USD: QE and low interest rates often weaken the USD, making U.S. goods more competitive in global markets, especially when Trump imposes tariffs on Chinese goods to promote domestic production.

- Example: In the period 2018-2019, Trump criticized the Fed for raising interest rates (to 2.5%) because it strengthened the USD, disadvantaging U.S. exports and reducing the effectiveness of tariffs against China.

- 2025 Vision: Trump may continue a tough trade policy, needing low interest rates to support American businesses amid global competition.

5. Political pressure on the Fed

Trump tends to view the Fed as a tool to serve his political goals, even though the Fed is an independent agency. He often criticizes the Fed when interest rates rise:

- Notable statement: In 2019, Trump called the Fed his “biggest enemy” for raising interest rates, and compared the U.S. to Europe/Japan (where interest rates are negative). He wants the Fed to pursue similar policies to keep interest rates low or negative.

- Personal benefits: Low interest rates are not only good for the economy but also reinforce Trump’s image as a leader who “brings America through crises.”

- Future: Trump may continue to pressure the Fed to maintain low interest rates, especially if the economy faces recession or inflation decreases.

6. Current context

As of March 2025, the Fed has tightened its policy after pandemic-era QE, with interest rates maintained at 4.25-4.5% to control inflation (based on trends in 2023-2024). And Trump is not satisfied with this interest rate level because:

- It slows economic and stock market growth – two factors Trump needs to demonstrate his capabilities.

- It increases borrowing costs, limiting major spending plans (such as infrastructure or further tax cuts). Trump may push the Fed to cut interest rates or return to QE, especially if the U.S. economy faces recession in 2025-2026.

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