Short version: No.
In a recent post on Central Banks and Independence, Harvard economist Jason Furman has led to lower private borrowing costs when discussing howard central bank rates are not needed.
The Federal Reserve sets only a handful of interval rates, and they are limited to interbank rates – discount rates (rates that banks can borrow from the Fed) and interest rates paid on the Fed’s bank reserves. Through the FOMC business, FOM tries to influence each other’s federal funding rates, but does not set that rate.
The current rates you and I are still determined by market factors such as risk, inflation, supply, demand, and more. It has no power. Yes, it tries to affect the race, but it doesn’t set them.
However, the president argues that race will reduce federal borrowing costs and reduce all American costs. There are two problems with this. One is theory and one is practical.
First, theoretical: US financial interest rates are set in the market, not the Federal Reserve. Like most prices (and interest rates are prices), interest rates arise from the intersection of supply and demand. Fees are not set by the Federal Reserve. The Federal Reserve tries to influence Lac through US monetary policy, but does not set race. If the Federal Reserve reduces that rate, but the basic supply and demand of the market remain the same, Neesher acquires a financial ratio. It’s like pushing a rope: no matter how many times you push it, it will put a coil into itself.
Certainly, if the market believes that the Federal Reserve’s interest rate cuts are unfair and likely to cause inflation, the market could demand a higher interstability to compensate for the expressed inflation. Therefore, the rate of decline in any federal reserve can actually lead to an increased federal borrowing cost.
I have seen this behavior in the US before. For example, between 2003 and 2004, the Fed’s target rate was down/flat, and financial interest rates were generally rising. In the Journals 2008-2015, the Federal Reserve target rates remained flat, close to zero – and the Treasury profits did their own thing. More recently, total numbers began to rise in August 2020 before the Federal Reserve began to raise interest rates. And the Ministry of Finance continued to rise even if the Fed began cutting rates in 2024.
Second, practical: current forecasts for the US federal budget and debt show that debt will continue to increase if nothing changes. Similarly, this suggests that the federal government needs to issue more Treasury departments to fund its debt. This suggests an increase in the supply curve. As the supply curve increases, the price of the goods decreases when everything else is held equal. The price of bonds and their interest rates are the opposite, so as the increase in Treasury supply indicates an increase in interstance rate, resulting in higher borrowing costs.
Ultimately, it is not a hopeful idea, but a good economic sense that will lead to reduced US borrowing costs.
