U.S. Treasury Secretary: Tariffs are not inflation drivers, Federal Reserve may cut interest rates before September
U.S. Treasury Secretary Scott Basset stated that the Federal Reserve may cut interest rates before September, and tariffs have not driven up inflation. Trump has repeatedly urged the Federal Reserve to lower interest rates. Basset believes that if the Federal Reserve follows this judgment, the rate cut may come earlier than September. Federal Reserve Chairman Powell pointed out that without Trump's tariff plan, the Federal Reserve would have already eased monetary policy. Despite signs of an economic slowdown, the Federal Reserve has kept interest rates unchanged at 4.25%-4.5%, facing criticism from Trump
According to the Zhitong Finance APP, U.S. Treasury Secretary Scott Bessent stated on Tuesday that he believes the Federal Reserve may lower interest rates before September. At this time, U.S. President Donald Trump has repeatedly urged the Federal Reserve to reduce interest rates from the current range of 4.25% to 4.50%.
Bessent pointed out, "I think the key is that tariffs have not pushed up inflation. If the Federal Reserve follows this judgment criterion, then the rate cut may come earlier than September, but it will definitely happen by September at the latest." He added, "Although I do not agree with their judgment criteria, if we follow that standard, why not choose to cut rates in the fall?"
On Tuesday, Eastern Time, Federal Reserve Chairman Jerome Powell stated at the European Central Bank Forum in Sintra, Portugal, that the Federal Reserve should have already eased monetary policy if it were not for President Trump's tariff plan on imported goods introduced earlier this year.
When asked if the Federal Reserve would have cut rates again this year if Trump had not announced higher tariffs, Powell candidly replied, "I think so. In fact, when we saw the scale of the tariffs, we paused our actions, and almost all inflation expectations for the U.S. rose significantly as a result."
This frank statement comes as the Federal Reserve maintains a wait-and-see stance under strong pressure from the White House, despite signs of a slowing U.S. economy. Last month, the Federal Reserve again kept the federal funds rate unchanged in the range of 4.25% to 4.5%, which has remained unchanged since December of last year.
According to the latest "dot plot," members of the Federal Open Market Committee of the Federal Reserve generally predict that there may be two rate cuts by the end of 2025. However, Powell stated at last month's press conference that the current Fed is "in a good position to continue to wait and see."
The Federal Reserve's insistence on maintaining the current interest rate level has been met with fierce criticism from Trump and his team. Trump publicly criticized Powell last week as "terrible" and even called him "a person of average intelligence."
