Treasury Secretary Bessent Urges Fed for 150bps Rate Cuts Starting September

U.S. Treasury Secretary Scott Bessent has publicly urged the Federal Reserve to begin a series of significant interest rate cuts, starting with a 50 basis point reduction in September, and ultimately lowering rates by 1.5 to 1.75 percentage points from current levels. Bessent argues that recent downward revisions to labor market data, released after the July FOMC meeting, should have prompted earlier rate cuts in June and July. Despite the Fed holding rates steady in July due to inflation and economic uncertainty, market expectations now strongly favor a rate cut in September, with a 95.9% chance of a 25 basis point reduction and some anticipation of a larger cut. President Trump has also pressured Fed Chair Jerome Powell to act more swiftly on easing monetary policy, criticizing the Fed's cautious approach amid ongoing trade tensions and tariff impacts. However, some Federal Reserve officials, like Atlanta Fed President Raphael Bostic, maintain a more cautious outlook, predicting only one cut this year unless the job market deteriorates further. Overall, Bessent’s comments mark a rare and direct call from a Treasury official for aggressive Fed action, reflecting growing expectations for monetary easing to support the economy.