By Tom Ozimek
Treasury Secretary Scott Bessent is urging the Federal Reserve to slash interest rates by half a percentage point at its September policy meeting of the Federal Open Market Committee (FOMC), and follow up with a series of reductions to bring borrowing costs down by at least 150 basis points.
Bessent told Fox News on Aug. 12 that “fantastic” consumer price data and sharply weaker labor market figures support an aggressive move by Fed officials to cut rates.
While speaking on Bloomberg Television on the same day, he said there is “a very good chance” of a 50 basis-point cut next month, followed by additional easing.
By any model, rates “should probably be 150, 175 basis points lower,” Bessent said, adding the Fed “could have had rate cuts in June and July” if policymakers had been aware of the full extent of the labor market slowdown.
Revised Labor Department data released Aug. 1 showed payrolls rose by just 73,000 in July, well short of forecasts for about 100,000. May’s total was cut from 144,000 to 19,000, and June’s from 147,000 to 14,000—a combined downward revision of 258,000. The three-month average gain now stands at 35,000, underscoring a sharp loss of hiring momentum.
Bessent said that a larger September cut would help make up for missed opportunities earlier this summer. The Fed has held its benchmark federal funds rate within a range of 4.25–4.50 percent for five consecutive meetings, despite repeated calls from President Donald Trump and senior administration officials for deeper and faster reductions.
Trump has been putting pressure on the central bank and its monetary policymakers, repeatedly criticizing Fed chair Jerome Powell and accusing the FOMC of keeping rates too restrictive. In an Aug. 12 post on Truth Social, Trump said Powell “must NOW lower the rate,” warning that high borrowing costs were doing “incalculable” damage to the economy.
The president has said that the benchmark federal funds rate should be in the 0.25–1.75 percent range, similar to those in countries such as Japan and Switzerland, to reduce federal borrowing costs and spur more business investment.
Powell has said the Fed will cut rates only once it is confident that the administration’s tariffs will not push inflation higher. He has also dismissed calls to factor in the government’s debt-servicing costs—made heavier by higher interest rates—when setting monetary policy.
The push for lower rates comes as inflation appears substantially contained. The headline Consumer Price Index rose 2.7 percent in July, in line with expectations, while core inflation ticked up to 3.1 percent. Later this week, a government report on wholesale prices—which represent business input costs that tend to eventually get passed along to consumers—is expected to show inflation at 2.5 percent, according to consensus forecasts from Bloomberg.
At the Fed’s July 30 meeting, two governors—Christopher Waller and Michelle Bowman—dissented from the decision to hold rates steady, instead backing a quarter-point cut. It was the first dual dissent on a rate decision since 1993. Both pointed to weakening labor market trends and warned the Fed risked falling behind the curve if it waited for further data.
Trump last week appointed Stephen Miran, chairman of the Council of Economic Advisors, to fill a vacant seat on the Fed’s Board of Governors through January 2026. Miran, who served as a senior Treasury adviser during Trump’s first term, has been a vocal critic of the Fed’s current stance, saying that rates remain too high despite inflation being near the 2 percent target.
Miran, who will be voting on interest rates when Fed policymakers meet in September, has praised Waller’s stance on monetary policy, calling him “a really good independent voice” on the board and highlighting his track record on inflation forecasting.
Bessent said in the Fox interview that he expects Miran’s presence at the Fed to “change the narrative” in the direction of faster rate cuts.
