US Treasury Secretary: "Fed Will Definitely Cut Rates by September... Could Be Sooner"

Forecast of Rate Cut in Fox News Interview
Maintains Critical Stance Similar to President Trump
"Tariff Mania Syndrome" Seems to Have Affected the Fed

Scott Besent, U.S. Secretary of the Treasury. Photo by AFP Yonhap News

Scott Besent, U.S. Secretary of the Treasury, predicted that the U.S. Federal Reserve (Fed) will lower interest rates no later than September.

In an interview with Fox News on July 1 (local time), when asked whether he believed the Fed would cut rates in the fall, Besent stated, "The criteria is that tariffs were not inflationary," adding, "If they follow this, the Fed could move even sooner, but at the very least, it will definitely lower rates by September."

He went on to say, "I do not agree with that criterion of the Fed," but emphasized, "If they are following it, why not in the fall?"

However, earlier in June, the U.S. Fed kept its benchmark interest rate at the current level (4.25?4.50%) and cited two main reasons: first, that the inflation rate remains somewhat elevated, and second, that President Donald Trump's tariff policies are likely to push prices higher. Since the beginning of Trump’s second administration, the Fed has kept rates unchanged in four consecutive decisions, a move for which President Trump has publicly criticized Chair Jerome Powell as incompetent.

Besent also criticized, "The Fed Board has shown two different responses to tariffs, and I am confused as to why they have not leaned more toward a rate cut or why they have maintained a freeze."

Regarding the Fed's Summary of Economic Projections (SEP) released after the June meeting, which raised its inflation forecast (year-end personal consumption expenditure price index) and lowered its U.S. economic growth outlook, he pointed out, "If they lowered the growth outlook, why didn’t they go further with a rate cut?"

He added, "The Fed cut rates by 0.50 percentage points last September, and at that time, inflation was higher and core inflation was much higher. I don’t know. Maybe the ‘tariff mania syndrome’ has affected the Fed as well."