Treasury Secretary Scott Bessent emphasizes the administration's focus on keeping Treasury yields low through fiscal policy, rather than relying on the Federal Reserve's actions.
The Trump administration is prioritizing keeping Treasury yields low rather than dictating the Federal Reserve 's actions, according to Treasury Secretary Scott Bessent. Bessent stated this during an interview with Fox Business host Larry Kudlow, who previously served as Director of the National Economic Council during Trump's first term.
While Trump has previously urged the Fed to lower its benchmark interest rate, Bessent clarified that the current strategy involves utilizing fiscal policy to maintain low rates. The administration's primary focus is on the 10-year Treasury yield, rather than the federal funds rate controlled by the central bank.Bessent explained that Trump believes that deregulation, tax cuts, and energy policy will naturally lead to lower interest rates and a stronger dollar. The administration aims to make the Tax Cuts and Jobs Act permanent, while also emphasizing energy exploration and deficit reduction. Bessent believes these measures will contribute to a favorable interest rate cycle. This focus on Treasury yields aligns with the view of Krishna Guha, head of global policy and central bank strategy at Evercore ISI, who believes Bessent's primary objective is to prevent the 10-year yield from exceeding 5 percent, a threshold beyond which Guha predicts a breakdown of Trump's economic policies.Recent statements from Trump, including his agreement with the Fed's decision to keep the funds rate steady in late January, suggest a lessening of tension between the administration and the central bank, potentially benefiting the markets
Trump Administration Treasury Yields Federal Reserve Fiscal Policy Interest Rates
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