Bessent Signals Bold Fed Pivot, Calling for 50-Point Rate Cut to Kick Off Easing Cycle

 

Treasury Secretary Scott Bessent intensified his push for a dramatic monetary shift, urging the Federal Reserve to kick off a cycle of rate reductions starting with a half-point (50-basis-point) cut in September—and potentially cutting rates by a total of 150 to 175 points over time. Speaking from a Bloomberg Surveillance interview, Bessent emphasized that many economic models support a substantial easing of the current tight policy stance.

He stressed that if more accurate labor market data had been available earlier, the Fed may have moved to lower rates in June or July. Specifically, revisions showing weaker-than-initially-reported job gains in those months suggest the central bank might have acted sooner.

Bessent's remarks quickly resonated in markets: global equities rallied, gold climbed, and the U.S. dollar weakened—signaling growing investor confidence in monetary easing. His stance also departures from tradition, as Treasury Secretaries rarely weigh in on Fed policy so directly.

Beyond monetary policy, Bessent hinted that a revenue-sharing model—currently applied to chipmakers Nvidia and AMD, where they remit 15% of Chinese sales to the U.S. government—could be extended to other industries over time. He also alluded to upcoming shifts in Fed leadership, increasing speculation about a more pro-growth tilt among future appointees.

The outcome of this call rests with the Federal Open Market Committee, which will weigh the latest data before deciding whether to follow this bold path. The market reaction suggests that investors are already positioning ahead of a potential aggressive easing cycle.