Key Points
- Trump is proposing $2,000 stimulus checks and lower interest rates.
- The U.S. economy grew at a 4.3% rate in the third quarter of 2025.
- Trump’s high tariffs are already keeping inflation above the Fed’s 2% target.
- The Fed may be forced to cut rates in 2026 if the job market continues to weaken.
President Trump often blames his predecessor, Joe Biden, for sparking the inflation crisis, but his own economic plans are starting to sound surprisingly familiar. Trump is now pushing for the government to send out $2,000 stimulus checks and wants the Federal Reserve to lower interest rates. Critics are pointing out that these are the same policies that many people believe caused prices to skyrocket in the first place.
When Biden took office, the economy was already growing rapidly as it rebounded from the pandemic. The government enacted a large-scale stimulus package, and the Federal Reserve kept interest rates at zero. This combination of cheap money and extra cash in people’s pockets sent inflation to a 40-year high in 2022.
Now, Trump is in a similar situation. The economy is strong, with GDP growing at a 4.3% rate, but the job market is showing signs of weakness. This has prompted Trump to call for a new round of stimulus.
Trump recently laid out what he calls the “Trump Rule.” He wants his next Federal Reserve chair to keep interest rates low to help the stock market, even if it means inflation rises. He believes a booming market could boost the entire economy.
However, basic economics tells us this is a recipe for higher prices. When you give people more money to spend without increasing the supply of goods, prices naturally rise.
To make matters more complicated, Trump has also introduced massive tariffs that are already keeping prices high. The current Federal Reserve Chair, Jerome Powell, has stated that these tariffs are the primary reason inflation remains above the Federal Reserve’s 2% target.
Trump seems to acknowledge this risk. He said that if his policies cause inflation to become a problem, the Fed can always raise rates “at the appropriate time.”
The Federal Reserve is expected to keep rates steady until the middle of 2026. However, if the job market continues to weaken, they might have to cut rates sooner than planned. This would give Trump exactly what he wants—a stimulated economy with low borrowing costs—but it might also bring back the same inflation problems he once criticized.
