Trump Says Rate Cuts Could Erase U.S. Debt as Markets React to Policy Signals

U.S. President Donald Trump reignited the debate over interest rates, arguing that sharp rate cuts could eliminate the U.S. debt burden without the need for painful spending cuts. He said borrowing costs remain far too high and insisted that the United States should have the lowest interest rates in the world. In his view, every percentage point reduction would dramatically lower debt servicing costs, while a two-point cut could erase the deficit altogether.


Growth, Markets, and Confidence

Trump linked his call for lower rates to economic momentum, expressing confidence that 2026 will be a strong year. He pointed to recent stock market gains as evidence that markets respond positively to supportive conditions and good news. Keeping rates low, he argued, would help extend the market rally and reinforce investor confidence at a time when growth remains a key priority.


Jobs Holding Up Despite Cuts

Addressing concerns about the labor market, Trump said employment remains solid even after reductions in government jobs. He suggested that easier financial conditions would further strengthen the economy, helping businesses expand and absorb potential shocks. Lower rates, in his view, would act as a stabilizer rather than a risk.


Policy Pressure and Global Backdrop


Trump’s comments also came against a wider political and global backdrop. He hinted that diplomatic progress with Iran remains possible, framing it as a rational choice for all sides. While brief, the remark added to the mix of geopolitical considerations that continue to influence market sentiment.


What It Means for Markets

Trump’s renewed push for rate cuts highlights the growing tension between political demands for easier monetary policy and the cautious stance typically favored by central banks. For investors, the message is clear: interest rates remain at the heart of the conversation, shaping expectations for debt dynamics, economic growth, and the direction of financial markets in the months ahead.