U.S. Officials Push Fed Toward Bigger Rate Cuts

Source: Coindoo Original Title: U.S. Officials Push Fed Toward Bigger Rate Cuts Original Link: A widening rift is forming around U.S. monetary policy, as senior government officials argue the Federal Reserve is moving too slowly while parts of the central bank itself debate how aggressive rate cuts should be in the year ahead.

Rather than focusing on what the Fed might do next, the conversation has shifted to how much political pressure the central bank can absorb as economic priorities collide.

Key Takeaways

• U.S. Treasury Secretary Scott Bessent is publicly pushing the Federal Reserve to cut interest rates faster to support economic growth.
• Inside the Fed, views are split, with some officials favoring patience while Stephen Miran has floated cuts as deep as 150 basis points.
• Markets remain skeptical, pricing in only limited rate cuts as leadership changes at the Fed add political pressure.

Treasury Turns Up the Heat

U.S. Treasury Secretary Scott Bessent has emerged as one of the loudest voices calling for faster and deeper interest-rate cuts. Monetary policy is now lagging behind the broader economic agenda being pushed by the White House.

Bessent has framed lower rates as the missing catalyst for stronger growth, arguing that fiscal initiatives and business investment would accelerate if borrowing costs were eased sooner rather than later. His comments align closely with President Donald Trump’s long-standing criticism of restrictive monetary policy.

Markets Aren’t Buying the Optimism

While political leaders are calling for action, market expectations tell a very different story. Betting activity suggests traders see limited room for easing this year, with most positioning for one or two small cuts at most.

That skepticism reflects a belief that the Fed will prioritize caution after already delivering multiple cuts last year. Investors appear unconvinced that economic conditions warrant the kind of rapid easing being advocated by the Treasury.

Inside the Fed: Competing Priorities

The divide is not just between politicians and markets – it also runs through the Federal Reserve itself. Minutes from recent policy meetings show a bloc of officials favoring a prolonged pause, arguing that economic data does not justify rushing into further cuts.

At the same time, some policymakers are far more concerned about the labor market than inflation. Officials have signaled that rate cuts could exceed current projections if employment conditions soften, highlighting the lack of consensus within the central bank.

A Push for Aggressive Easing

The most dramatic proposal has come from some Fed officials, who have suggested the central bank could slash rates by as much as 150 basis points. These officials argue that inflation pressures are largely contained and that the central bank should now focus on maximizing job growth.

They have pointed to inflation running close to target levels and said the economy has room to absorb millions of new jobs without triggering a renewed price surge. From this perspective, overly tight policy poses a greater risk than easing too soon.

Leadership Uncertainty Raises the Stakes

Adding another layer of complexity is the approaching end of current Fed leadership tenure. With potential leadership transitions on the horizon, speculation over succession is already shaping expectations for future policy.

It has been made clear that incoming leadership preferences would favor immediate rate cuts. Various candidates are widely viewed as frontrunners, with previous arguments that the Fed still has room to loosen policy without destabilizing inflation.

Monetary Policy at a Crossroads

Taken together, the signals paint a picture of a central bank heading into a politically charged transition period. Markets expect restraint, the Treasury wants acceleration, and parts of the Fed are openly split on priorities.

The direction of interest rates this year may ultimately depend less on economic data alone and more on who controls the narrative – and the leadership – at the Federal Reserve. As politics and policy become increasingly intertwined, the Fed’s next moves could redefine its independence as much as its stance on rates.