You’ve probably seen the headlines. Trump wants interest rates at 1% or maybe even lower. He’s calling out Federal Reserve Chair Jerome Powell, sometimes using words like "corrupt" or "incompetent." It feels like a tug-of-war where the rope is the entire American economy. But honestly, if you’re waiting for your mortgage or credit card bill to plummet just because the White House is making noise, you might be waiting a while.
The reality of trump interest rate cuts is messy. It’s a mix of raw political pressure, some pretty intense legal drama involving the Department of Justice, and a Federal Reserve that is trying—very loudly—to prove it can’t be bullied.
The Battle Over Your Wallet
Right now, we are in a weird spot. Last year, in 2025, the Fed actually did cut rates three times. They brought the benchmark rate down to a range of 3.5% to 3.75%. Why? Because they were worried about the job market cooling off. But as of January 2026, the vibe has shifted. Unemployment fell to 4.4% in December, and suddenly, the "emergency" feel of those 2025 cuts has evaporated.
Trump isn't happy about that. He’s been posting on Truth Social that borrowing costs should be "MUCH LOWER!!!" to save the country a fortune on its $30 trillion debt. He’s basically argued that if the Fed slashed rates by 3 percentage points, the U.S. would save a trillion dollars a year in interest.
Math is one thing. The law is another.
Why the Fed is Digging in Its Heels
If you’ve been following the news this week, you know things just got personal. The Justice Department is actually investigating Jerome Powell. It’s supposedly about a $2.5 billion renovation of the Fed’s headquarters, but Powell isn't buying it. He called the subpoenas a "pretext" to force him into cutting rates.
Here is the thing most people miss: the Fed is designed to be independent for a reason.
If a President could just order interest rate cuts whenever they wanted, they’d probably do it every election year to juice the economy. The problem? That usually leads to massive inflation. We’ve seen it happen in places like Argentina and Brazil. When you keep rates low while running huge deficits, prices tend to spiral.
Current experts, like Michael Feroli from J.P. Morgan, are now saying we might not see any rate cuts at all in 2026. He thinks the economy is actually too strong for them.
The 10% Credit Card Cap
Aside from the Fed, Trump has floated a very specific, very disruptive idea: a 10% cap on credit card interest rates for one year.
Think about that. The average credit card interest rate right now is hovering near 24%. Some people with lower credit scores are paying 36%. Cutting that to 10% sounds like a dream for anyone carrying a balance. It could save Americans tens of billions of dollars.
But there's a catch.
Banks are already balking. They argue that if they can't charge higher rates to cover the risk of lending to people with lower credit scores, they’ll just stop lending to them entirely. If you have a credit score under 600, a 10% cap might not mean a cheaper loan—it might mean no loan at all.
What Happens Next?
Jerome Powell’s term as Chair ends in May 2026. This is the real turning point.
Trump is already looking at replacements. The names floating around—the "Two Kevins"—are Kevin Warsh and Kevin Hassett. Both are seen as much more likely to support the lower rates the President wants. But even then, the Chair is only one vote. There are 12 people on the committee that decides where rates go.
If you are looking for actionable moves, don't bank on a 1% interest rate anytime soon.
- Watch the May Transition. If a "dove" (someone who likes low rates) takes over the Fed in May, we might see the market start to price in more aggressive cuts for the second half of 2026.
- Audit Your Variable Debt. If you have a variable-rate loan, don't assume the "Trump cuts" are a done deal. With inflation still sticky and the Fed feeling defensive, rates could stay "higher for longer" just to prove a point.
- Credit Card Strategy. If the 10% cap actually gains legislative traction, expect banks to tighten lending standards immediately. If you need to open a line of credit or a new card, doing it before the policy shifts might be safer.
The tension between the White House and the Fed is at an all-time high. It's a high-stakes game of chicken where the prize is the cost of your next car, house, or monthly bill.
Next Steps for Your Finances
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To stay ahead of these shifts, you should closely monitor the Federal Open Market Committee (FOMC) meeting minutes scheduled for release later this month. These documents will reveal if other Fed members are beginning to align with the White House or if they are unifying behind Powell's current "wait and see" approach. Additionally, track the Consumer Price Index (CPI) data releases; if inflation doesn't drop significantly below 3%, the Fed will have all the domestic cover they need to keep rates exactly where they are, regardless of political pressure.