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While on the campaign trail, President-elect Donald Trumppromised to lower interest rates.
And while the president doesnt have the power to directlyset rates, their policies can certainly impact them.
Can Trump Lower Interest Rates?
The short answer is that no, Trump cant lower interest rates when he takes office in 2025.
That federal funds rate trickles down to impact the interest rates on everything from mortgages to credit cards.
For example, the Fed kept rates higher throughout late 2022 and 2023 to control the high inflation rates.
But in late 2024, it startedlowering rates as inflation decreased.
Because of that, Trump has little direct influence on interest rates.
The seven board members arenominated by the presidentand confirmed by the Senate to serve 14-year terms.
Meanwhile, the chair and vice chair serve four-year terms.
For example, tariffs, which Trump has promised to implement when he becomes president, are often inflationary.
Tax cuts, which Trump has also promised, can also be inflationary.
Finally, experts project that Trumps mass immigration plancould contribute to increased inflation.
So, how exactly do inflationary policies affect interest rates?
When inflation gets too high, the Fed may raise interest rates as a means of controlling it.
Higher interest rates often encourage people to spend less money, which can help reduce inflation.
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