Treasury Secretary: Fed Focus Should Be on Long-Term Rates
Treasury Secretary Scott Bessent emphasized that the Trump administration is not pressuring the Federal Reserve to lower short-term interest rates. Instead, the focus is on reducing longer-term borrowing costs through 10-year Treasury yields.
"He and I are focused on the 10-year Treasury," Bessent told Fox Business's Larry Kudlow. "He's not calling for the Fed to lower rates."
Bessent's comments follow recent statements by President Trump that the central bank was right to pause rate hikes. Trump had previously expressed a desire for lower rates.
While the Fed sets short-term rates, factors such as economic growth, inflation, and Treasury supply influence longer-term yields. Bessent noted that past rate cuts by the Fed have not significantly reduced 10-year Treasury yields.
Regarding tariffs, Bessent said they are a temporary measure aimed at boosting domestic manufacturing and reducing trade deficits. He believes that if regulations are reduced, tax cuts are made permanent, and energy prices are lowered, interest rates will stabilize.
Bessent also addressed concerns about Elon Musk and Dogecoin's access to the Treasury's payment systems. He assured that these systems are secure and a study is underway to enhance accountability and traceability.