President Donald Trump claimed the U.S. economy could achieve growth rates as high as 20%, arguing that such expansion should not prompt the Federal Reserve to raise interest rates. Speaking at an Oval Office event on prescription drug prices, Trump said, "We could have a GDP of 14, 15, 16 and 20," and asserted that "success in growth does not cause inflation." Such growth would be unprecedented in modern history, with only one quarter since 1947 recording annualized real GDP growth of 20% or higher—the third quarter of 2020, when the economy rebounded at a 34.9% rate after a 28% contraction the prior quarter. Current growth is far lower, with real GDP expanding at a 1.5% annualized rate in the second quarter of 2026, down from 2.1% in the first quarter, while core PCE inflation ran at 3.6%, above the Fed's 2% target. Trump urged the Fed to cut rates, saying, "We should have the lowest interest rates anywhere in the world," but the central bank held its benchmark rate steady at 3.5% to 3.75% in July, with Wall Street now expecting a September hike.
Trump pushes for rate cuts, but Fed holds steady and market expects a hike, implying rates stay higher.
Rate hike expectations and inflation above target pressure bond yields upward.
