Treasury Secretary Scott Bessent said the Federal Reserve should keep the door open to a larger, 50 basis-point rate cut next month, after opting to hold rates steady at its last meeting. Bessent told Fox Business on Tuesday that the real thing now to think about is whether we should get a 50 basis-point rate cut in September.
He pointed to revised data showing weaker job growth in May and June than initially reported, which was released just two days after the Fed’s July 30 decision to leave rates unchanged.
According to Bessent, the Fed “could have been cutting in June, July” had it had the updated figures earlier. He made the remarks shortly after fresh inflation data showed the consumer price index (CPI) rose 0.2% in July, while core CPI, excluding food and energy, increased 0.3% in line with forecasts. Goods prices remained subdued despite tariff hikes, while services inflation accelerated.
“Everyone was expecting… goods inflation, but there was actually this very odd service inflation,” he said.
Markets rally as investors bet on deeper September rate cut
S&P 500 , Nasdaq, and Dow Jones popped about 1%-1.4% higher on positive economic news, continually solidifying the belief that a September rate cut is coming. Also, according to the latest CPI data, tariffs have had a milder impact on goods prices than anticipated, boosting investor optimism and expectations that price pressures will eventually wane.
The rally also reflected expectations that the Fed may adopt a more aggressive easing stance, with futures markets now pricing in a strong likelihood of at least a 25-basis-point cut, and a meaningful chance of the 50-basis-point reduction floated by Bessent.
Bessent expressed hope that Stephen Miran, President Trump’s open Fed board seat nominee, will be confirmed in time for the Sept. 16–17 policy meeting. Miran, currently head of the White House Council of Economic Advisers, has been nominated for a term ending in January, though Bessent suggested he could be asked to remain longer.
On the search for a successor to Fed Chair Jerome Powell, whose term ends in May, Bessent said Trump is casting “a very wide net” and considering candidates based on their monetary and regulatory policy stances and their ability to overhaul the Fed’s structure. He argued the institution has become “bloated,” risking its independence.
Bessent blasts Fed renovation as U.S. pushes for major trade deals
Bessent swiped at the Fed’s $2.5 billion renovation of its Washington headquarters, noting that he is paying personally for his office refurbishment at the Treasury. Trump has repeatedly criticized Powell over the project’s cost, alongside his frustration at the Fed’s reluctance to cut rates this year.
On trade, Bessent said the U.S. aims to reach substantial agreements with major partners in the coming months. He also touted more than $10 trillion in committed private-sector investments since Trump’s return to the White House.
The Treasury secretary said the U.S. is in a strong position and expects to reach substantial agreements with all major countries. Bessent said that several major trade deals remain unfinished, including agreements with Switzerland and India, noting that the latter has been “a bit recalcitrant” in discussions with Washington. He expressed hope the Trump administration could finalize the negotiations by the end of October.
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