Trump calls for interest rates to be lowered to 1%, economists warn it may drive up inflation.

According to reports, U.S. President Trump recently suggested that the Fed drop the Benchmark Interest Rate to 1% to reduce government borrowing costs. Economists point out that under the current economic environment of a 4.1% unemployment rate and a 2.5% inflation rate in the U.S., such a significant rate cut could potentially raise inflation again and undermine the Fed's policy independence. Historical data shows that a 1% interest rate typically occurs during economic crises, such as the 2008 financial crisis and the 2020 pandemic.

Analysis shows that the "Big and Beautiful Act" passed by the Trump administration is expected to expand the fiscal deficit, and if paired with aggressive drops in interest rates, it may exacerbate market concerns about inflation. Fed officials emphasize that there are risks associated with significant drops in interest rates before the impact of the new tariff policy on inflation becomes clear.