Trump’s Rate-Cut Agenda Collides With Retiring Boomers, Investment Surges, and Geopolitical Risks

Benzinga 2025-08-04

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President Donald Trump’s push for lower interest rates faces major headwinds beyond the Federal Reserve, according to Bloomberg. Structural shifts in global savings and investment trends are pushing long-term borrowing costs higher. Retiring Baby Boomers, reduced Treasury purchases by China and oil-exporting nations, geopolitical tensions, and surging government debt have reversed a decades-long decline in the natural rate of interest. Bloomberg Economics estimates show the natural rate rose from 1.7% in 2012 to 2.5% in 2024, and may hit 2.8% by 2030, keeping ten-year Treasury yields near or above 4.5%. Trump’s threats to fire Fed Chair Jerome Powell and install a rate-cutting loyalist could lower short-term rates, but at the cost of Fed credibility, risking even higher long-term yields.

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