You have to define what you mean by "interpolate". The mechanisms that LLM use are not mysterious, and they are not the same as used by humans.

If you interpret “interpolate” in the literal sense, and apply it to the mechanisms behind LLMs, then the claim that they only interpolate, is straightforwardly false.

Taking it instead as a metaphorical claim may be more valid, but in that case it doesn’t depend on our understanding of how LLMs work.