Trump boasts that "the U.S. economy can grow by 20%" and claims the Federal Reserve should not raise interest rates.

On Monday local time, U.S. President Trump announced an agreement aimed at reducing prescription drug prices from the Oval Office, stating that U.S. economic growth could reach 14%, 15%, 16%, or even 20%, and emphasized that such rapid growth should not prompt the Federal Reserve to raise interest rates. "Successful growth does not trigger inflation," Trump told reporters at the event. This remark comes as he continues to pressure the Federal Reserve to lower borrowing costs, while Fed officials are still grappling with inflation above the 2% target. In July of this year, the Federal Reserve maintained the benchmark interest rate at 3.5% to 3.75%, but three policymakers dissented, favoring a 25 basis point increase. Many Fed observers expect the Federal Open Market Committee (FOMC) to resume interest rate hikes at its next meeting in September. However, any growth rate close to 20% mentioned by Trump is almost unprecedented in the modern U.S. economy. According to data from the Bureau of Economic Analysis (BEA) since 1947, the annualized growth rate of real Gross Domestic Product (GDP) has reached or exceeded 20% in only one quarter the third quarter of 2020, when the economy reopened after a widespread shutdown due to the COVID-19 pandemic, with an annualized growth rate of 34.9%. In the previous quarter, the economy had contracted at an annualized rate of 28%. The second highest quarter was the first quarter of 1950, when the U.S. and the world were recovering from World War II, and the baby boom generation was just being born, with an annualized real GDP growth rate of 16.7%. In the nearly 80 years of data since then, no other quarter has reached the 20% threshold. In contrast, the current economic growth rate is only a fraction of those levels. According to the latest estimates from the BEA, the annualized growth rate of real GDP in the second quarter of 2026 is 1.5%, down from 2.1% in the first quarter. It should be noted that quarterly GDP growth rates are reported on an annualized basis, meaning that a reading of 20% does not represent an actual growth of 20% within a single quarter. Trump cited the potential for high growth as another reason the Fed should lower interest rates rather than raise them. "We should have the lowest interest rates in the world," he said in response to a reporter's question about possible Fed rate hikes. "In the past... if we released good data, rates would go down. Now, if you release good data, rates go up instead because they are too afraid of inflation." Strong economic growth does not necessarily lead to inflation. If productivity and capacity increase in line with demand, the economy can expand rapidly without significant price pressures. However, when demand growth exceeds the economy's ability to produce goods and services, prices will be driven up. This is precisely the trade-off faced by the current Federal Reserveamid a still-tight labor market and persistent inflation in the services sector, policymakers remain highly alert to any signals that might exacerbate overheating demand. This latest "crossfire" between Trump and the Federal Reserve further highlights the deep divides between the White House and the central bank regarding the path of interest rates. While the president is confident about extremely high growth, historical data and current growth rates indicate that the 20% target is more of a political vision than a short-term economic reality. For the markets, the inflation and employment data to be released before the September meeting may prove more decisive than any lofty rhetoric.