A cautious Federal Reserve kept policy rates unchanged during the first half of 2025. It was trying to ascertain whether the Trump administration’s protectionist measures would result in a one-time price level shift, or whether the radical attempts to reshape global trading patterns might generate persistently elevated inflationary pressures.

But the fact that policy rates have not budged since last December has infuriated President Trump. He has repeatedly castigated U.S. monetary authorities for their reluctance to cut rates. Believing that the Fed has fallen behind the curve, President Trump has taken to refer to the Fed chair derisively as “Too Late” Jerome Powell.

Amidst widespread concerns surrounding U.S. fiscal sustainability, President Trump recently suggested that the Federal Reserve should substantially cut policy rates to help lower the mounting interest rate cost associated with servicing the massive government debt. Trump has gone so far as to state that he would pick someone favoring rate cuts to be the next chair of the Fed.

Independent analysts forecast U.S. debt-to-GDP ratio to

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