Bessent Calls Rate Cuts Key to Sustaining U.S. Economic Momentum

Source: CoinEdition Original Title: Bessent Calls Rate Cuts Key to Sustaining U.S. Economic Momentum Original Link: U.S. Treasury Secretary Scott Bessent has intensified pressure on the Federal Reserve to accelerate interest rate cuts this year. Speaking amid mixed economic signals, Bessent argued that monetary easing now holds the key to sustaining momentum across the U.S. economy. His remarks arrive as inflation trends closer to the Fed’s target, while labor data shows early signs of cooling.

Bessent framed lower borrowing costs as essential for extending recent growth gains. He linked current economic resilience to the administration’s fiscal strategy, including tax reforms, trade agreements, and deregulation. However, he signaled that monetary policy still lags behind these measures. Consequently, he urged the central bank to act sooner rather than risk slowing progress.

Diverging Views Inside and Outside the Fed

Bessent’s stance contrasts with the Federal Reserve’s official outlook. Policymakers currently project a cautious path, with only a single quarter-point cut expected by late 2026. December meeting discussions showed concern about easing too quickly despite easing inflation pressures.

However, some officials have expressed openness to a different path. Fed Governor Stephen Miran, a recent appointee, forecast as much as 150 basis points in rate cuts this year. He pointed to inflation hovering near 2.3% and a labor market losing some momentum. Hence, he suggested faster easing could help prevent unnecessary job losses.

Additionally, Chicago Fed President Austan Goolsbee has indicated support for more cuts than the median forecast suggests. Recent payroll data has reinforced this debate by showing slower job growth and softer hiring trends. As a result, market participants continue to reassess expectations for monetary policy through 2026.

Politics, Markets, and the Fed’s Next Chapter

Moreover, the political backdrop adds another layer of complexity. Jerome Powell’s term as Fed chair ends in May, placing future policy direction under scrutiny.

President Donald Trump has already stated that his next nominee must move quickly to lower rates. Consequently, leadership changes could reshape the Fed’s policy stance sooner than expected. A leading candidate has also signaled room for further easing. Meanwhile, traders remain skeptical, pricing in only two cuts this year despite growing political pressure. Besides, financial markets continue to balance policy uncertainty against incoming economic data.