Treasury spent $276 billion in interest on the national debt in the final three months of 2025, says the CBO-up $30 billion from a year prior | Fortune

"The Treasury paid out $92 billion a month in net interest on the national debt in the final three months of 2025, the Congressional Budget Office (CBO) reported. That's 13% higher than the year prior. In its monthly budget review for September, released Friday, the CBO reported that budget outlays for October to December included a $276 billion spend on net interest on the public debt, up $31 billion for the same period at the close of 2024. The reason is straightforward."

"The CBO reported interest payments were higher because the value of the debt was larger in the final three months of 2025 (which coincides with the first three months of the 2026 fiscal calendar beginning in October). For the fiscal year of 2025 ending in September, the government spent $1.22 trillion on interest alone, per Treasury data. Additionally, the costs were higher because of "higher long‐term interest rates and an increase in the rate of inflation." Conversely, declines in the short-term interest rate partially mitigated the overall rise in payments."

"Moving into 2026, the Treasury's budget will get little relief from the rising costs of America's $38.4 trillion national debt burden. While the short-term base rate decreased thanks to cuts from the Fed last year, analysts are widely expecting the base rate to decrease at a slower pace in the New Year. For example, Polymarket's odds that at the next Federal Open Market Committee (FOMC) meeting in a little over a fortnight's time will result in no change currently sits at 95%. Meanwhile, the likelihood of a 25bps cut from the current rate of 3.5% to 3.75% sits at approximately 4%. CME's FedWatch index shows similar odds."

The Treasury paid $92 billion per month in net interest during the final three months of 2025, totaling $276 billion for October–December and marking a 13% year-over-year increase. Higher interest costs reflected a larger debt stock and elevated long-term interest rates combined with increased inflation, while lower short-term rates partially offset the rise. Net interest expense reached $1.22 trillion for fiscal 2025. The national debt was $38.4 trillion. Market pricing and analysts expect limited near-term reductions in the policy rate, reducing immediate relief for debt-servicing costs.

Read at Fortune