Deutsche Bank: Firing Powell won't save much on debt costs
2025-07-23 18:11:22
US President Donald Trump last month used the cost of federal debt as a new reason to press Powell to cut interest rates. But a new analysis shows that firing the Federal Reserve chairperson and forcing him to lower interest rates won't help. Deutsche Bank chief US economist Matthew Luzzetti and others wrote that replacing Powell would not change the Treasury's debt interest costs. Trump has repeatedly called for a 3 percentage point rate cut and said it would save more than $1 trillion. But doing so while short-term Treasury yields fell, long-term yields rose, according to calculations by the Deutsche Bank team, driven by fears that a more compliant Fed would mean higher inflation. Specifically, if Trump fired Powell, the Treasury would save only $12 billion to $15 billion by 2027.
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