President Donald Trump is losing his own battle to bring down interest rates.

For months, Trump has publicly pressured the Federal Reserve to slash its benchmark rates, arguing that high borrowing costs are an affront to the scale and strength of the U.S. economy and that America deserves the cheapest borrowing costs in the world. He has insisted that rate cuts would serve as "Rocket Fuel!" for economic growth and make housing more affordable.

Instead, borrowing costs have moved in the opposite direction. Since the war in Iran began in late February, lending has become more expensive, pricing many families out of mortgages and auto loans. The federal government is feeling the strain as well: it has spent $827 billion so far this fiscal year to service the national debt — more than it has devoted to national defense. That figure reflects the compounding burden of a debt load that has grown for decades, as older securities issued at rock-bottom rates mature and are refinanced at today's elevated borrowing costs, locking in higher expenses for years to come.

The scope of the problem came into focus this past week when Kevin Warsh, Trump's newly appointed Fed chair, said in only his second press conference on the job that inflation continues to run hot. He offered no clear guidance on a solution.

Rates on 30-year U.S. Treasury bonds have climbed to their highest levels in nearly two decades — the exact opposite of what Trump pledged to voters. The 10-year U.S. Treasury note's interest rate surged above 4.7% on Friday, exceeding the level Trump inherited when he returned to the White House last year.

Trump has largely dismissed the rate increases, portraying the economy as booming despite the government's recent report that annualized growth over the prior three months was a sluggish 1.5%.

"We have the most successful environment that we've ever had," Trump told his Cabinet on Friday. "There's never been anything like it from the standpoint of investment into our country."

Neither Trump nor Treasury Secretary Scott Bessent addressed interest rates during the public portion of the Cabinet meeting. White House spokesman Kush Desai, however, said the end of the Iran war would eventually reduce energy costs and give the Fed room to cut rates.

"Oil prices — and thus overall inflation — will plummet again when President Trump forces a successful resolution with Iran, further paving the way for additional interest rate cuts by the Federal Reserve," Desai said.

The persistence of elevated borrowing costs has become a political liability for Republicans heading into the November elections, particularly because Trump's own policies have contributed to the upward pressure on rates. The tariffs he imposed last year caused rates to spike so quickly that he was forced to scale them back and restructure them. His strong support for building artificial intelligence data centers has required large-scale bond financing that appears to have contributed to higher interest rates. Meanwhile, the Iran conflict has pushed oil prices upward.

Republicans had hoped to demonstrate tangible progress on affordability before the midterms. Trump can point to a low unemployment rate and steady consumer spending as evidence that the economy remains on solid footing, but there is little indication these arguments are resonating with the public.

Research released in June by Georgetown University's Juan Felipe Riaño and the University of California, Berkeley's Francesco Trebbi offers one possible explanation: voters are more concerned with whether their incomes are outpacing inflation than with headline economic statistics.

During the 2024 campaign, Trump and Republicans not only promised lower interest rates but also suggested that prices could fall outright under their policies. Over the past 12 months, however, inflation has nearly kept pace with hourly wage gains — and that comparison understates the problem because consumer debt service costs are excluded from the consumer price index.

"It cut against Democrats in 2024, and if prices and borrowing costs keep outrunning wages into the fall, the same logic points at Republicans now," Riaño, the Georgetown University economist, told the AP.

Earlier this year, the Trump administration directed Freddie Mac and Fannie Mae, the two mortgage firms under government conservatorship, to purchase at least $200 billion in home loans in an effort to bring down mortgage rates.

Republicans had also hoped to campaign on declining rates alongside a bipartisan bill designed to boost home construction, aiming to shore up their House and Senate majorities. A GOP lawmaker, speaking on condition of anonymity to discuss internal strategy, said the expectation was that Trump would sign the bill once mortgage rates dipped below 6%, improving housing affordability and public sentiment toward the broader economy.

Instead, Trump dismissed the legislation as a "big yawn" and allowed it to become law without his signature. On Thursday, Freddie Mac reported that 30-year mortgage rates were averaging 6.66% — essentially unchanged from a year earlier.

Warsh, who has served as Fed chair since May, has indicated he is comfortable letting financial markets play a larger role in setting rates rather than relying on central bank intervention. That posture marks a notable departure from the practice of his predecessors, who used forward guidance — explicit communication about the likely path of rates — as a primary tool for steering borrowing costs toward the Fed's objectives. Although the Fed has held its benchmark rate steady throughout the year, markets on their own have opted to demand a higher premium for holding U.S. government debt.

"Markets reflect the higher inflation, policy uncertainty," said John Silvia, CEO of Dynamic Economic Strategy. "They are the product of events."

On Wednesday, Warsh framed the market-driven rate dynamics as a positive development, even though the outcome diverges from what Trump had anticipated from his pick for Fed chair.

"Market participants are learning to play the ball, not the referee — and market prices will continue to respond in the direction and magnitude they see fit," Warsh said. "This is, in my view, a change for the better — and we are just getting started."

Time, however, may not be on Trump's side. The next Fed rate-setting meeting concludes on September 16. According to CME FedWatch, markets currently expect Fed officials to vote to raise rates in an effort to curb inflationary pressures — a move that would run directly counter to Trump's central economic demand and would tighten borrowing conditions further just weeks before the November elections.