Trump's 'Rocket Fuel' Interest Rate Cuts Are Losing Steam as Borrowing Costs Rise

President Donald Trump has been pushing for interest rate cuts to boost the economy, but he's losing that fight. The president wants to make borrowing costs cheaper and create a 'Rocket Fuel' effect on growth.

However, since the war in Iran began at the end of February, interest rates have risen, making it harder for families to afford mortgages or auto loans. The government is also feeling the squeeze, spending $827 billion so far this fiscal year to service the national debt, more than it has devoted to national defense.

Despite Trump's claims that the economy is booming, with a low unemployment rate and solid consumer spending, there are few signs that his economic messaging is connecting with the public. One possible reason is that voters care more about whether their incomes are outpacing inflation, according to research released in June by Georgetown University's Juan Felipe Riaño and the University of California, Berkeley's Francesco Trebbi.

The Fed's new chair, Kevin Warsh, said this past week that inflation continues to run hot but offered no clear guidance on how to fix the problem. The markets currently expect the Fed officials to vote to raise rates in order to reduce inflationary pressures at their next meeting on September 16th.