Trump boasted that “the US economy can grow 20%,” saying that the Federal Reserve should not raise interest rates as a result

The Zhitong Finance App learned that on Monday local time, US President Trump said in the Oval Office when announcing an agreement aimed at lowering the price of prescription drugs that the US economy may grow by 14%, 15%, 16%, or even 20%, and emphasized that such rapid growth should not cause the Federal Reserve to raise interest rates.

“Successful growth does not cause inflation.” Trump told reporters at the event. This statement comes as he continues to pressure the Federal Reserve to reduce borrowing costs, while Federal Reserve officials are still dealing with inflation above the 2% target level.

In July of this year, the Federal Reserve kept the benchmark interest rate unchanged at 3.5% to 3.75%, but three policy makers objected and preferred to raise interest rates by 25 basis points. Many Fed observers expect the Federal Open Market Committee (FOMC) to restart interest rate hikes at its next meeting in September.

However, any growth rate close to 20% mentioned by Trump is almost unprecedented in the modern US economy.

According to data from the US Bureau of Economic Analysis (BEA) since 1947, the annualized real gross domestic product (GDP) growth rate reached or exceeded 20% in only one quarter — the third quarter of 2020, when the economy reopened after a widespread shutdown due to the COVID-19 pandemic, and the annualized growth rate was as high as 34.9%. In the previous quarter, the economy had contracted deeply at an annualized rate of 28%.

The second-ranked quarter was the first quarter of 1950, when the US and countries around the world were recovering from World War II. Baby boomers had just been born, and the real GDP growth rate was 16.7% per annualized. Since then, in the nearly 80-year data series, no other quarter has hit the 20% threshold.

By contrast, the current economic growth rate is only a fraction of this level. According to BEA's latest estimates, the annualized real GDP growth rate for the second quarter of 2026 was 1.5%, down from 2.1% in the first quarter.

It should be clarified that the quarterly GDP growth rate is reported at an annualized rate, that is, a reading of 20% does not indicate an actual increase of 20% in a single quarter.

Trump cites the potentially high growth rate as another reason why the Federal Reserve should cut interest rates rather than raise them. “We should have the lowest interest rates in the world.” In response to a reporter's question about a possible rate hike by the Federal Reserve, he said, “In the past... if we published good data, interest rates would drop. Now, if you publish good data, interest rates will rise because they are too afraid of inflation.”

Strong economic growth does not necessarily lead to inflation. If productivity and capacity increase at the same time as demand, the economy can expand rapidly without significant price pressure. But when demand grows faster than the economy's ability to produce goods and services, prices are pushed up. This is the current trade-off problem facing the Federal Reserve — in a context where the labor market is still tight and inflation in the service sector remains sticky, decision makers are highly wary of any signs that may exacerbate overheating demand.

This latest “clash” between Trump and the Federal Reserve once again highlights the deep differences between the White House and the central bank over the interest rate path. Despite the president's confidence in super-rapid growth, historical data and actual growth rates suggest that the 20% target is more like a political vision than a short-term economic reality. For the market, the inflation and employment data to be released before the September interest rate meeting is probably more decisive than any rhetoric.