Federal pressure mounts as Bessent calls for significant reduction in interest rates

Trump Urges Federal Reserve to Reduce Interest Rates and Assails Chair Jerome Powell Repeatedly

, and Administrator

2025 September 1 . 6:43 PM

2 min read

Fed faces pressure to lower interest rates, as per Bessent's statement

Federal pressure mounts as Bessent calls for significant reduction in interest rates

In a recent statement, US Treasury Secretary Scott Bessent has advocated for a significant reduction in interest rates, suggesting that the Federal Reserve's benchmark rate should be approximately 150 basis points lower than its current level to reach what economists refer to as the "neutral rate."

Bessent's stance is not an explicit demand for a specific series of cuts but rather a sharing of his model-based views and a response to revised labour market data from the Bureau of Labor Statistics, which indicates slower payroll growth in recent months than previously reported.

The Secretary has proposed a gradual approach to rate reductions, characterizing it as "crawl, walk, run." He has hinted at the possibility of a smaller, initial cut of 25 basis points, followed by potentially larger cuts. In a more specific example, Bessent has entertained the idea of a 50 basis point rate cut in September 2025.

Bessent's position supports an administration view that the Federal Reserve has been too slow in easing monetary policy, which some believe is hindering the economic recovery. He has been vocal about the need for the Fed to be more proactive in cutting rates to support growth, contrasting Fed Chair Jerome Powell's cautious, data-driven approach.

Global markets responded positively to Bessent's comments, with the FTSE 100 coming close to a record high and New York markets extending gains. Sterling shot nearly a cent higher versus the dollar to just under $1.36, a three-week high.

However, it is important to note that the Federal Reserve kept its benchmark rate at a target range of 4.25 to 4.5% in July, and no new information about future interest rate decisions was provided.

This nuanced position shows Bessent supporting an easing trajectory while maintaining publicly that ultimate decisions rest with the Fed itself. The call by Scott Bessent is the latest attempt by the Trump administration to sway the Federal Reserve to lower interest rates.