Bessent calls for 150 basis point rate reduction
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The news: US Treasury Secretary Scott Bessent has urged the US Federal Reserve to lower interest rates by at least 1.5 percentage points.
The context: In a Wednesday interview with Bloomberg television, Bessent said the Fed should execute a cycle of rate cuts, beginning with a 50 basis point cut at the Fed’s upcoming September meeting.
“I think we could go into a series of rate cuts here, starting with a 50 basis point rate cut in September,” Bessent told Bloomberg. “If you look at any model” it suggests that “we should probably be 150, 175 basis points lower.”
While the central bank’s policymakers held rates at the target range of 4.25% to 4.5% at their last meeting, Bessent argued that if officials had been aware of the revised labour market data released two days after the meeting, they may have cut rates. He added that that may have also cut rates for the June meeting.
Bessent has previously only commented publicly on previous rate decisions, refraining from make comments about upcoming meetings.
The downwardly revised payroll data for May and June from the Bureau of Labor Statistics prompted significant outcry from the Trump administration, with the President going as far as firing the agency’s chief over the revisions.
Trump has repeatedly made public calls for the Fed to cut rates and has led a campaign against chair Jerome Powell, calling for him to resign before his tenure expires next year.
Global stocks pushed higher on Wednesday on growing expectations that the Fed will cut interest rates at its upcoming September meeting, following data released on Tuesday that showed US inflation held steady at 2.7% in July, confounding expectations that Trump’s tariffs would push consumer prices higher.
The source: Bloomberg
