Nobody can glower America's interest rates into submission

The administration should focus instead on pragmatic solutions

- BILL DUDLEY

America's leaders have latched onto the idea that they can address some big problems—most notably a gaping budget deficit—by forcing interest rates downward. If only it were that easy.

President Donald Trump keeps turning up the pressure on the Federal Reserve to lower short-term rates, publicly expressing his dissatisfaction with Fed Chair Jerome Powell. Treasury Secretary Scott Bessent wants to reduce longer-term rates by issuing less long-term US debt. Financial regulators are tweaking capital requirements, encouraging large US banks to buy and hold more Treasury securities, which would push prices up and yields down.

If these efforts work as intended, they could deliver significant benefits. Say, if interest rates were a mere percentage point lower than current projections, the US government could save about $3.5 trillion in debt-service costs over 10 years—not far from what the One Big Beautiful Bill Act is expected to add to the federal budget deficit over the same period.

Unfortunately, these efforts aren't likely to succeed and could even have the opposite of the desired effect.