Moynihan says economists predict no Fed rate cuts as inflation gradually decreases

U.S. Treasury Secretary Scott Bessent renewed his call for a half-percentage-point interest rate cut at the Federal Reserve’s September meeting, urging the central bank to move into a sequence of rate reductions. His comments followed fresh data showing inflation holding steady at 2.7% in July. Bessent argued that the Fed’s benchmark rate should be at least 1.5 percentage points lower than its current level, saying in a Bloomberg Surveillance interview, “I think we could go into a series of rate cuts here, starting with a 50 basis point rate cut in September. If you look at any model, it suggests we should probably be 150, 175 basis points lower.”

At its July 30 policy meeting, the Fed left rates unchanged in the 4.25% to 4.50% target range. Bessent reiterated that, had policymakers known about revised labor market data released on August 1—which cut previously reported payroll gains for May and June by a combined 258,000—they might have already delivered rate cuts in June and July. “I suspect we could have had rate cuts in June and July,” he said.

Bessent also floated the idea of expanding a new export tax arrangement beyond the semiconductor sector. The deal, brokered under pressure from Donald Trump, requires Nvidia and AMD to share 15% of their Chinese chip revenue with the U.S. government in exchange for export licenses. “I think we could see it in other industries over time,” Bessent told Bloomberg TV. “Right now this is unique, but now that we have the model and the beta test, why not expand it?”