Everyone wants a straight answer. If you’re staring at a mortgage statement or a maxed-out credit card, you’re probably asking: will interest rates go down with Trump now that he’s back in the Oval Office?
The short answer is: it’s complicated. Honestly, it’s a tug-of-war between a President who wants rates at 1% and a Federal Reserve that’s terrified of inflation sticking around like a bad cold. We’ve seen the headlines. Trump has been vocal—very vocal—about wanting borrowing costs slashed to "goose" the economy and help pay off the $38 trillion national debt. But the math doesn't always play nice with the politics.
The Battle for the Fed’s Steering Wheel
Right now, we are in a weird spot. Federal Reserve Chair Jerome Powell is basically under siege. Trump hasn’t been shy about his frustration, even suggesting at one point that he’d like a say in rate decisions. In December 2025, Trump told The Wall Street Journal he’d like to see rates at 1% or lower by next year.
That’s a massive drop from where we are.
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But here’s the rub: The Fed is supposed to be independent. They look at data, not polls. Currently, the "dot plot" from Fed officials suggests they might only squeeze in one or two tiny cuts in 2026. J.P. Morgan’s chief U.S. economist, Michael Feroli, actually thinks the Fed might not cut rates at all this year. He’s even eyeing a potential hike in 2027 if the job market stays too hot.
It’s a classic standoff. You have the White House demanding "MUCH LOWER!!!" rates (Trump’s words on Truth Social) to reduce the $970 billion we spend annually just on interest for the national debt. On the other side, you have Powell and the FOMC worried that cutting too fast will send the price of eggs and gas back into the stratosphere.
Tariffs and the Inflation Trap
You can't talk about interest rates without talking about tariffs. Trump’s "America First" trade policy is a double-edged sword for your wallet.
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On one hand, tariffs bring in revenue. On the other, they can act like a sales tax. If it costs more to bring in steel or electronics, companies often pass those costs to you. When prices go up, that’s inflation. And when inflation goes up, the Fed usually keeps interest rates high to cool things down.
Economists at Goldman Sachs and Barclays have already pushed back their rate-cut forecasts into mid-2026. They’re watching to see if the 2025 tariff hikes cause a "second wave" of inflation. If that happens, the dream of 3% mortgage rates might stay a dream for a while longer.
What This Means for Your Mortgage and Credit Cards
If you’re waiting to buy a house, there’s a glimmer of hope, but it’s a bit of a gamble.
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- Mortgages: Surprisingly, mortgage rates actually dipped below 6% recently. This happened because Trump directed Fannie Mae and Freddie Mac to buy $200 billion in mortgage-backed securities. It’s a clever workaround. By bypassing the Fed and using these "government-sponsored enterprises," the administration can artificially pull mortgage rates down even if the Fed stays stubborn.
- Credit Cards: This is where it gets wild. Trump recently floated a 10% cap on credit card interest rates. Right now, the average is north of 21%.
- The Catch: Banks are freaking out. CEOs from JPMorgan and Citigroup have warned that if a 10% cap happens, they’ll simply stop giving credit cards to anyone without a near-perfect credit score. It's a "be careful what you wish for" scenario. You might get a lower rate, but only if you can get the card in the first place.
The 2026 Outlook: A Mixed Bag
So, back to the big question: will interest rates go down with Trump?
If you look at the Congressional Budget Office (CBO) projections, they expect the Fed’s key rate to settle around 3.4% by 2028. That’s lower than the 2023-2024 peaks but nowhere near the "zero-rate" era we saw during the pandemic.
- The "Bull" Case: Trump successfully pressures the Fed, inflation stays under 3%, and the "tariff rebate" idea puts cash in pockets without spiking prices. Rates fall to 3% or 4% by late 2026.
- The "Bear" Case: Tariffs trigger a trade war, the federal deficit explodes because of tax cuts, and bond investors get nervous. If investors lose faith in the U.S. dollar, they’ll demand higher yields, which means interest rates could actually rise despite what the President wants.
Actionable Steps for Your Money
Don't just wait for the news to break. Here is how you should handle the "Trump Economy" volatility:
- Lock in what you can: If you see a mortgage rate in the mid-5s, don't wait for 3%. We might not see those "emergency" low rates again for a decade.
- Watch the 10-year Treasury: This is the real "magic number." When the yield on the 10-year Treasury note goes up, mortgage rates follow. If it starts climbing toward 4.5% or 5%, grab your financing immediately.
- Clean up your credit: With the potential for a "credit crunch" if that 10% card cap goes through, having a high credit score is your only ticket to staying in the game. Banks will get very picky very fast.
- Hedge against inflation: If you believe the tariffs will drive prices up, look into TIPS (Treasury Inflation-Protected Securities) or other assets that hold value when the dollar buys less.
The reality is that no President has a "dial" on their desk that moves interest rates. It's more like a heavy door that Trump is trying to shoulder open while the Fed is leaning against it from the other side. Expect a lot of noise, some tactical wins for consumers in the mortgage market, but a slow, grinding path for everything else.