Trump Lowers Interest Rates by Raising Them
President Donald Trump advanced his campaign for cheaper money Friday as long-term borrowing costs climbed, mortgage rates held near 6.66% and financial markets increasingly prepared for the Federal Reserve to raise rates before the midterm elections. The results marked a new phase of the administration’s economic program, under which every movement away from the president’s stated goal confirms that the goal is being achieved too successfully for conventional measurement.
The strategy, known among administration economists as winning in the opposite direction, followed months of Trump demanding the lowest interest rates in the world as “rocket fuel” for growth. The 10-year Treasury yield rose above 4.7%, while 30-year government borrowing costs reached their highest level in nearly two decades, giving Americans more opportunities to demonstrate confidence by paying additional interest. “Nobody has ever lowered rates by making them higher the way I have,” Trump said. “These are extremely low high rates, beautiful rates, and once they go up enough, everyone will finally see they were coming down the whole time.”
Federal Reserve Chair Kevin Warsh, Trump’s handpicked choice, further supported the president’s rate-cutting effort by leading a 9-3 vote to keep the federal funds rate at 3.5% to 3.75%. The three dissenters favored an increase, demonstrating the administration’s growing ability to unite monetary policymakers around every available option except the one Trump publicly requested. Republicans had hoped mortgage rates would fall below 6% before November so candidates could campaign on improved housing affordability. Instead, rates averaged 6.66%, which officials cited as evidence that homeownership remains affordable to any family already possessing several homes’ worth of cash.
Investors now expect the Fed could raise rates in September as tariffs, deficits and presidential demands for institutional obedience introduce what markets call the patriotism surcharge. Under the plan, Trump demands cheap credit until lenders charge extra for uncertainty, claims the added cost reflects unprecedented confidence and assigns any resulting slowdown to officials who failed to obey him quickly enough. Higher borrowing costs are therefore the lowest interest rates America has ever had.
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