Treasury’s Bessent Urges 50-Basis-Point Fed Rate Cut in September Meeting
Treasury Secretary Scott Bessent is calling on the Fed to consider a bigger rate cut at the September meeting.
Quick overview
- Treasury Secretary Scott Bessent is advocating for a 50-basis-point rate cut by the Fed at the September meeting to support growth and manage inflation.
- July's Consumer Price Index showed modest inflation, suggesting the Fed has room for more aggressive policy actions.
- Bessent highlighted the potential confirmation of Stephen Miran to the Fed Board, emphasizing the need for strong leadership in monetary policy.
- The upcoming September meeting is crucial as it may influence U.S. monetary policy amidst ongoing discussions about inflation and economic growth.
Treasury Secretary Scott Bessent is calling on the Fed to consider a bigger rate cut at the September meeting. He made the comment just after July’s inflation numbers were released and said the Fed should be open to a 50-basis-point cut after holding rates steady at the last meeting.
The July Consumer Price Index (CPI) rose 0.2% month-over-month and core inflation, which excludes food and energy, was 0.3% as expected. Service sector costs rose but goods prices were contained despite the recent tariff hikes from the Trump administration.
Bessent said this means the Fed has room to act more aggressively on policy. A half-point cut could support growth and keep inflation in check. He said the Fed’s flexibility could help stabilize markets and build confidence among businesses and consumers.
Fed Board Changes
Bessent also mentioned the potential confirmation of Stephen Miran, Trump’s nominee for the open Fed Board seat, before the September 16-17 meeting. Miran is head of the White House Council of Economic Advisers and would serve through January with the possibility of extending beyond that.
- Key Qualities for Fed Chair Consideration:
- Strong views on monetary policy.
- Clear regulatory policy approach.
- Ability to manage and reform the Federal Reserve’s structure.
Bessent said the Fed is “bloated” over time and has risks to its independence. His comments suggest the administration is looking for leaders who can make big policy decisions and improve the organization. The search for a new Fed chair, as Jerome Powell’s term ends next May, adds to the importance of the September meeting.
September Meeting in Focus
President Trump has been critical of Powell for not cutting rates earlier this year and Fed officials have said they need more data to see the inflation impact of tariffs. Bessent’s 50-basis-point recommendation means the administration wants to be more aggressive on growth.
Markets will be watching the September meeting to see what the Fed does to balance inflation control with growth. Key takeaways for investors and policymakers:
- A half-point Fed rate cut could reduce borrowing costs for businesses and consumers.
- Miran’s confirmation could mean faster and more proactive policy.* Both the numbers and politics point to action.
The September meeting is shaping up to be pivotal, as it could set the tone for U.S. monetary policy amid ongoing debates over inflation, growth, and regulatory reforms.
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