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The conventional policy assumption is that higher interest rates calm bond markets by bringing inflation expectations to heel. Donald Trump has stated, in his view, that rate hikes would not provide that assurance.
That is a claim about the bond market's current dominant concern, and whether it holds depends entirely on mechanism, not rhetoric. The case for his position runs through the fiscal channel.
The read-through from Trump's view is that bond market anxiety is something monetary tightening cannot reach.
Higher interest rates increase government borrowing costs, and if bond investors are primarily worried about debt sustainability rather than inflation, tightening could deepen rather than resolve their concern.
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