Bessent says Fed should cut rates as Musk signals DOGE should target the central bank
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The news: US Treasury Secretary Scott Bessent said that the US Treasury market, specifically two-year rates, are signalling the Federal Reserve should lower interest rates.
The numbers: As of 8:00am in New York on Thursday, the two-year Treasury yields were at 3.58% compared with a benchmark federal funds rate of 4.33%. The Fed currently targets the key rate at a range of 4.25% to 4.5%.
The context: Speaking in an interview with Fox Business, Bessent commented: “We are seeing that two-year rates are now below fed funds rates. So that’s a market signal that they think the Fed should be cutting.”
The comments are the latest in an intensifying stoush between the US administration and the Fed, as policymakers resist calls from US President Trump to lower rates as inflation remains above the 2% target. Additionally, the Fed is anticipating further pricing pressure as a result of Trump’s tariffs ahead of its next meeting on 7 May.
On Wednesday, Elon Musk told reporters that he was considering sending his Department of Government Efficiency (DOGE) team into the Federal Reserve, arguing that a recent renovation of its headquarters was a waste of taxpayer money. “Since at the end of the day, this is all taxpayer money, I think we certainly — we should definitely — look to see if indeed the Federal Reserve is spending two and a half billion dollars on their interior designer.”
Earlier this week Trump lashed out at Fed Chair Jerome Powell directly at his 100 day rally, stating: “You’re not supposed to criticise the Fed…You’re supposed to let him do his own thing — but I know much more than he does about interest rates.”
Trump also claimed that inflation is “basically down” and that interest rates have come down “despite the fact that I have a Fed person who’s not really doing a good job.”
