U.S. Treasury Secretary Scott Bessent spoke at the White House in Washington, USA on February 3, 2025.
Elizabeth Frantz | Reuters
Treasury Secretary Scott Bessent said Wednesday that the Trump administration is more focused on keeping Treasury production low than what the Fed does.
While Trump has begged the Fed to lower its benchmark rate in the past, Becent said the current strategy is using fiscal policy leverage to keep prices low. He added that the benchmark used by the government would be the 10-year Treasury Department, rather than the federal funding rate controlled by the central bank.
“The president wants to lower interest rates,” Bescent said. During the interview Fox Business Host Larry Kudlow served as director of the National Economic Commission during Trump’s first term. “He and I are focused on the Treasury for 10 years, what is the benefit.”
Starting from September 2024, the Federal Reserve has participated One cutting cycle This takes out a full percentage point, starting with the capital interest rate. The benchmark sets short-term loans that banks collect from each other, but historically influenced many other rates, such as car loans, mortgages and credit cards.
But the same is true for the Treasury yield and market-based inflation expectations indicators after the Fed cuts. However, since Trump took office, the 10-year treasury has mostly lowered in Wednesday’s deal and dropped by about 10 basis points, or 0.1 percentage point.
10-year rate of return
Bessent shows that Trump will not cut the Fed as he did in his first term.
“He wants lower interest rates. He doesn’t ask the Fed to lower interest rates,” said Becent. Trump believes, “If we relax the economy, if we complete this tax bill, if we lower energy, , then interest rates will take care of themselves, and the US dollar will take care of themselves.”
The government’s priority is to permanently formulate the Tax Cuts and Employment Act, while also focusing on energy exploration and deficit reduction.
“We cut spending, we cut government size, we are improving efficiency in government, and we are going to enter a good interest rate cycle,” Besent said.
Treasury Secretary’s statement on target bond yields “is consistent with our view that he has a job – trying to prevent a 10-year yield from breaking 5% at this point we think Trump tools will break down while stocks continue to grow , housing and other interest rates continue to evolve. Krishna Guha, head of global policy and central bank strategy at Evercore ISI, wrote.
The final trading price for 10 years was 4.45%, down from the mid-January peak of 4.8%.
A few days ago, Trump actually said he agreed to the Fed’s January 29 decision to keep funds stable, and Guha said the tension between the two sides “eased” and could be positive for the market.
