Trump Threatens to Dismiss Bessent if Fed Withholds Rate Cuts

President Donald Trump has issued a clear warning to Treasury Secretary Scott Bessent regarding interest rates. During a speech at a US-Saudi investment forum in Washington, D.C., Trump stated he might dismiss Bessent if the Federal Reserve does not reduce interest rates soon.

Trump’s Ultimatum to Bessent on Fed Rate Cuts

Trump expressed his dissatisfaction with the Fed’s current interest rate levels, remarking, “The rates are too high, Scott.” He emphasized the need for immediate action, threatening, “If you don’t get it fixed fast, I’m going to fire your ass.” This marks a continuation of Trump’s ongoing criticism of the central bank and its chair, Jerome Powell.

Bessent’s Position and Influence

• Scott Bessent has been seen as a stabilizing presence within the Trump administration.
• He has advised Trump against firing Powell, stating that Powell deserves more time in his role.
• Commerce Secretary Howard Lutnick, in contrast, seems more inclined toward replacing Powell.

Trump’s past threats to dismiss Powell can be traced back to the spring, but he backed off after advisors warned of potential market chaos. This is the first instance where Trump has implied that Bessent may be advocating for Powell’s continued tenure.

Market Reactions and Future Outlook

James Ragan from DA Davidson noted that Bessent is highly regarded on Wall Street for his role as a rational voice in financial matters. He commented, “Markets have really appreciated having Bessent around.”

Despite Trump’s consistent remarks about Powell, such as calling him “too late” and “a complete moron,” the decision-making process involves 12 individuals. Powell leads the Federal Open Market Committee, which recently began to cut interest rates for the first time in nine months.

Current Economic Climate

As of October, interest rates have reached their lowest point in three years. The Fed has been adjusting rates to combat potential unemployment spikes. However, there is a division among officials about the feasibility of further rate cuts, given inflation persists above their 2% target. Furthermore, upcoming data on the labor market’s health could influence the Fed’s decisions in the near future.

As the Trump administration navigates these economic challenges, the interactions between Trump, Bessent, and Powell will be crucial in shaping the direction of U.S. monetary policy.