Treasury Secretary Scott Bessent on Wednesday urged central bankers to issue a half-point cut at next month’s meeting – breaking from his zipped-lip stance on the Fed’s monetary agenda.
Bessent said the central bank’s target rate should be at least 1.5 percentage points lower than it is now.
“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 Surveillance” on Wednesday.
“If you look at any model,” it suggests that “we should probably be 150, 175 basis points lower.”
Central bankers kept interest rates in the target 4.25% to 4.5% range after their July meeting – even as President Trump ramped up pressure on Chairman Jerome Powell and dissent festered within the Fed committee.
Bessent argued that Fed officials might have slashed rates in July if they were aware of intense downward revisions to labor market data that were released two days later.
“I suspect we could have had rate cuts in June and July,” Bessent said.
Earlier this month, the Bureau of Labor Statistics adjusted payroll figures for May and June down 258,000 jobs – revealing that the labor market had actually been weakening for months.
Trump quickly fired Erika McEntarfer, who led the department, and announced E.J. Antoni, a longtime critic of the Bureau of Labor Statistics, as her replacement.
Bessent’s push for immediate rate cuts came after months of refusing to speak on future Fed decisions, instead only commenting on past events and market sentiment. The head of the Treasury typically doesn’t weigh in on the Fed’s policymaking.
Meanwhile, Trump has escalated his verbal assault on “stupid,” “hard-headed” Powell – even threatening this week to sue the chairman over a controversial $2.5 billion renovation of the Fed’s headquarters.
For months, Powell and other Fed officials have adopted a “wait and see approach,” arguing they need to see more evidence of how tariffs will impact inflation before slashing rates.
Bessent said Wednesday that there are 10 or 11 candidates in the running to succeed Powell when his term expires in May 2026.
He did not give specific names, but said the list includes current Fed officials and private-sector individuals.
Bessent also said he does not expect Stephen Miran – a Trump ally nominated to fill a recent opening on the board – to stay at the central bank after his seat’s term ends in January.
