Treasury Secretary Scott Bessent says he isn’t in the business of giving the Fed marching orders, but his view that a neutral interest rate would be 150 basis points below the current level has fueled speculation over how soon and how far rates could be cut.
“I didn’t tell the Fed what to do. What I said was that to get to a neutral rate on interest, that would be an approximately 150 basis point cut. I did not call for them to get there,” he clarified on “Mornings with Maria,” Thursday.
“The other thing that I said was that perhaps because they had bad BLS data in June and July that perhaps, perhaps, a 50 basis point cut in September was warranted,” he continued.
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Bessent’s comments came in response to Strategas Chairman and CEO Jason Trennert, who, earlier in the show, pointed out the “public” nature of the Trump administration’s attempts to influence the Federal Reserve, a shift he said reflects the social media era, where “a lot of things are public… maybe that shouldn’t be.”
Bessent went on to suggest that the Fed might begin with a smaller, 25 basis point cut before accelerating, telling Maria Bartiromo that the agency could perhaps take a “crawl, walk, run” approach to change.
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“I can tell you that, based on the 50 basis point cut in September 2024, right before the election, that the conditions now are slightly more favorable for a cut,” he shared.
“But again, I believe that there is room, if one believes in the neutral rate and where it is, that there is room for a series of rate cuts…. I’m not calling for one. I didn’t call for one, I just said that a model of a neutral rate is approximately 150 basis points lower.”
FOX Business has reported that Bessent is leading interviews with the potential Fed chair candidates to replace current Fed Chair Jerome Powell amid his tensions with the Trump administration.
President Donald Trump told reporters on Wednesday afternoon that he has narrowed down the list of potential successors for Powell to “three or four” candidates and intends to announce his decision earlier than planned.
FOX Business’ Sophia Compton and Edward Lawrence contributed to this report.
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