Fed’s Potential 300bp Rate Cut Sparks Economic Debate

Key Points

1. Trump has consistently criticized Jerome Powell and the Federal Reserve, calling for interest rate cuts, though he cannot legally dismiss Powell.

2. A 300bp rate cut would be unprecedented, exceeding even the maximum cuts during the 2008 financial crisis or the 2020 pandemic.

3. Reducing U.S. public debt interest rates by 300bp could theoretically save $870 billion annually, but immediate refinancing is unfeasible, with more realistic first-year savings estimated at $174 billion.

4. Such a drastic cut could lead to inflation surpassing 5% and housing price increases of over 25%, while the dollar has already seen significant declines in 2025.

5. Historical data shows that maximum rate cuts have not exceeded 100bp, making Trump's proposed 300bp cut highly unlikely according to experts.