Trump claims that the high cost of U.S. debt repayment is also a reason why the Federal Reserve should lower interest rates, but economists do not agree.

President Donald Trump has been calling for a interest rate cut from the Federal Reserve for months, and now he has added a new reason to this view: a rate cut is crucial for lowering the cost of government debt. Shortly after returning to the White House, Trump began pressuring Federal Reserve Chairman Jerome Powell to take stimulus measures during the transition to higher tariff levels. Now, Trump states that a rate cut is needed to address one of the main reasons behind the high federal budget deficit. Data released by the U.S. Treasury last week shows that over the past eight months, interest payments on federal debt amounted to approximately $776 billion. This is a 7% increase compared to the same period in the previous fiscal year, with interest costs already climbing to the highest levels since the 1990s. This figure now exceeds defense spending, reflecting the sharp expansion of outstanding debt influenced by expenditures related to the COVID-19 pandemic and multiple rounds of tax cuts this century as well as the lingering effects of the high interest rates implemented by the Federal Reserve to combat inflation. When Moody's downgraded the U.S. sovereign rating last month, it cited the rise in debt costs as one of the key reasons for the downgrade.