Federal Reserve's 75 Basis Points Rate Hike Will Add $50 Billion in Interest on Short-Term Treasury Bonds

The United States currently has approximately $7 trillion in short-term Treasury bonds in circulation, of which about $6.1 trillion will mature within a year. Approximately $7.5 trillion in tradable U.S. Treasury bonds are set to be refinanced in 2026, with about $4 trillion and $3.5 trillion maturing in 2027 and 2028, respectively. If the Federal Reserve raises interest rates by another 75 basis points, the interest on short-term Treasury bonds alone will increase by about $5 billion in one year, accounting for approximately 0.15% of GDP. Most of these bonds will be rolled over at market rates higher than those at the time of issuance, and the U.S. is facing more expensive large-scale refinancing.

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