Treasury Secretary Clarifies Trump's Stance on Interest Rates
In a recent interview, Treasury Secretary Scott Bessent clarified the Trump administration's position on interest rates.
Focus on 10-Year Treasury Yields
Bessent stated that President Trump and himself are primarily focused on reducing longer-term borrowing costs specifically through 10-year Treasury yields.
No Call for Fed to Lower Rates
Despite Trump's previous statements, Bessent emphasized that the administration is not requesting the Federal Reserve to lower its short-term interest rates.
External Factors Influence 10-Year Yields
While the Fed influences short-term rates, factors such as economic growth, inflation, and Treasury supply also impact 10-year government bond yields.
Trump's Recent Reversal
Bessent's comments mark a shift in the White House's stance on Fed policy. Trump had previously called for lower rates but has since indicated that the central bank's decision to hold rates steady was appropriate.
Bessent's Perspective on Fed
Bessent refrained from commenting on the Fed's future actions, focusing solely on past rate cuts and their impact on 10-year Treasury yields.
Impact of Tariffs on Inflation
Bessent addressed concerns that Trump's policies, including tariffs, could contribute to inflation. However, he believes tariffs are a strategic move to boost domestic manufacturing and ultimately reduce the trade deficit.
"3-3-3" Economic Plan
Bessent reaffirmed the administration's "3-3-3" plan, which aims to reduce the deficit to 3% of GDP, sustain 3% growth, and increase oil production by 3 million barrels per day.
Assurance on Payment Systems
Bessent assured that the Treasury Department's critical payment systems remain secure, despite discussions around enhancing accountability and traceability.