Expectations for interest rate cuts in the US have risen following the release of inflation data. Treasury Secretary Scott Bessent expressed hesitations regarding current rates and provided his forecasts.
Key Remarks from the Treasury Secretary
US Treasury Secretary Scott Bessent stated on Bloomberg TV that a significant cut in interest rates could be imminent. He believes the Fed should initiate a 50 basis point reduction next month.
Likelihood of Rate Cuts
Bessent highlighted that the current economic situation supports a possible reduction of rates by 150–175 basis points in the near future. He noted the high probability of a 50 basis point reduction in September. "I think we could enter a series of rate cuts, starting with a 50 basis point cut in September."
Factors Influencing the Fed's Decision
The Secretary noted the sharp decline in nonfarm payroll data as a positive indicator that may facilitate rate cuts. He expressed optimism regarding the Fed's decision in September, indicating a strong likelihood of a 50 basis point cut. Bessent also mentioned the ongoing process of evaluating candidates to replace Fed Chair Jerome Powell next year.
In light of recent data and the Treasury Secretary's forecasts, interest rate cuts in the US appear increasingly likely, which could significantly impact the economic landscape.
