US Treasury Secretary Bessent: the Fed is already signalling rate cuts this year - WSJ

US Treasury Secretary Bessent: the Fed is already signalling rate cuts this year - WSJ

Washington, July 2, 2025 — US Treasury Secretary Scott Bessent has indicated that the Federal Reserve is signaling a potential interest rate cut this year, a stance that aligns with the recent remarks from Fed officials. Bessent’s comments come amidst ongoing debates about the Federal Reserve's monetary policy and the potential for a change in leadership at the central bank.

Fed Governor Christopher Waller, who has been vocal about his support for a rate cut, recently reiterated his call for the central bank to lower borrowing costs at its July 29-30 policy meeting. Waller, who is considered a contender to succeed Fed Chair Jerome Powell, believes that the Fed should focus on preserving the labor market’s strength and not wait until the labor market deteriorates before taking action [1].

Waller’s stance is in contrast with most other Fed officials who have expressed patience in waiting to see the full impact of Trump’s tariffs on inflation. The latest economic data, which showed a resilient job market and strong consumer spending, has led some Fed officials to maintain a wait-and-see posture on rate cuts [1].

However, President Trump has been vocal in his criticism of the Federal Reserve’s current policy, particularly regarding interest rates. Trump has repeatedly demanded that the Fed lower rates to stimulate economic growth. His administration has also been critical of the Fed’s $2.5 billion renovation, which Trump has described as a “disgrace” and a “fireable offense” [2].

In response to these pressures, Bessent has indicated that a formal process to identify a new Fed chair has begun. Trump has hinted at nominating someone who agrees with his stance on interest rates. The Treasury Secretary has also suggested that Powell’s term as Fed governor, which ends in January 2028, may be a factor in the decision-making process [2].

The latest economic data, including June’s inflation figures which climbed to 2.7%, has added another layer of complexity to the Fed’s decision-making process. While inflation has been a concern, the job market’s resilience has led some officials to believe that a rate cut is not immediately necessary. However, the political pressure and the potential for further inflation could sway the Fed’s decision [3].

In Mexico, President Claudia Sheinbaum has expressed agreement with the Bank of Mexico’s recent rate cuts, highlighting the global trend of lowering interest rates to stimulate economic growth. Sheinbaum’s support for the central bank’s actions underscores the international context in which the Fed operates [4].

As the Federal Reserve prepares for its July meeting, the market is closely watching for any signals about potential rate cuts. Bessent’s comments, along with Waller’s stance, suggest that the Fed is considering a rate cut this year, a move that could have significant implications for the US economy and global markets.

References:
[1] https://www.cnn.com/2025/07/17/business/fed-official-calls-for-rate-cuts
[2] https://www.financialexpress.com/world-news/us-news/us-treasury-secretary-bessent-suggests-powell-should-leave-fed-board-in-may-calls-it-tradition-formal-process/3915813/
[3] https://timesofindia.indiatimes.com/business/international-business/us-inflation-data-consumer-prices-jump-to-2-7-in-june-fed-rate-cut-in-doubt-as-donald-trump-faces-pressure/articleshow/122514078.cms
[4] https://www.tradingview.com/news/reuters.com,2025:newsml_L1N3TF0QM:0-mexico-s-sheinbaum-says-she-agrees-with-central-bank-s-rate-cuts/