US president Donald Trump is on the verge of achieving a key point in his economic policy program. After that, priorities will change.
For months, President Trump has been pushing the US Federal Reserve Bank to cut interest rates.
Trump’s aim is to be able to refinance the high national debt more cheaply.
Stock markets immediately rejoice
Now, Fed Chairman Jerome Powell has signalled for the first time that he considers a cut in the key interest rate likely. On Friday, the US central bank chief said at the important central bank meeting in Jackson Hole that the long-awaited interest rate cut is likely to take place in September.
The stock markets immediately jumped for joy.
The US president’s strategy thus appears to be working. Trump had recently put targeted pressure on the economy – including through punitive tariffs and trade policy threats – in order to push the central bank toward an expansionary monetary policy.
Less government money for foreigners
The prospect of an interest rate cut by the end of September would enable the government to refinance large portions of their national debt on better terms, as muula.ch reported on the strategic plan.
Trump himself had spoken of savings of $300 billion per year if US key interest rates were to fall by just 1 percentage point.
In addition, many of the US’s creditors are based abroad, and with lower interest payments, subscribers to US Treasury bonds outside the country would simply receive less money.
Stablecoin providers buy bonds
Trump needs low inflation rates but higher unemployment to persuade the Fed to cut key interest rates.
He tried to achieve this with his punitive tariffs, low oil prices, and lower rents and drug prices.
Even with the ‘Genius Act’, Trump boosted demand for US government bonds because stablecoin providers such as USDC, USDT & Co. have to back digital money with such assets. It all goes hand in hand.
Coordinated schedule
If Trump manages to refinance the $9.3 trillion more cheaply by the end of September, he can concentrate on the next part of his economic strategy.
This is also supported by the fact that US Treasury Secretary Scott Bessent recently told the Japanese business newspaper Nikkei that all trade talks would be largely concluded by October.
After all of this refinancing, the US government is likely to focus more attention on the consequences of its own policies.
This should be good news for Switzerland, as Trump’s high trade barriers will become less significant.
Flexible investment funds help
The burdens on businesses and consumers resulting from US punitive tariffs and trade conflicts are considerable.
Trump will introduce measures to mitigate the economic and political damage.
Flexible investment funds from the EU and Japan amounting to hundreds of billions of dollars will be used to stimulate those economies in areas hostile to Trump. It’s a clever idea.
Midterm elections as the next target
Whether this strategy will actually pay off remains to be seen. On the one hand, falling interest rates would significantly ease the US debt burden.
On the other hand, the policy of confrontation in global trade has strained the trust of many partners.
For Trump, this raises the question of whether the financial flexibility he has gained will be sufficient to correct the problems he has actually caused himself – and whether he can use the time until the next midterm elections to stabilize the economic balance sheet during his term in office.
August 24, 2025/kut./ena.
