Bessent on 0.5% Sept Fed cut, 11 Powell replacement candidates
Starting at 6:50 in the Bloomberg video interview below, Treasury Secretary Scott Bessent makes a few key points about Fed policy:
Bessent said we could go into a series of rate cuts starting with a 50 basis point rate cut at the September 17 FOMC meeting.
As of today, CME futures predict a 99.9% chance of a 25 basis point (0.25%) Fed cut, and a 0.1% chance of a 50 basis point (0.5%) Fed cut.
Bessent said the Fed Funds Rate is too constrictive at today’s 4.5% level, and should be 150 basis points (1.5%) to 175 basis points (1.75%) lower.
Bessent said Fed governor Adriana Kugler who resigned effective last Friday, August 8, was “very political,” and said the Trump nominee to replace her, Stephen Miran, will likely be confirmed by the Senate before the September 17 FOMC meeting.
Bessent doesn’t expect Miran to stay on after January 31. Instead, Miran is there to buy time to find suitable permanent replacements for Kugler as well as Fed chair Jay Powell.
Here are more details on Stephen Miran’s role and timing as a voting Fed member.
In the video, Bessent teases up to 11 more candidates to replace Jay Powell as Fed chair, but didn’t name names.
In a separate Bloomberg report, they name the following 11 candidates:
– Rick Rieder, chief investment officer for global fixed income at BlackRock
– David Zervos, chief market strategist at Jefferies
– Larry Lindsey, a former Fed governor and G.W. Bush official
– Christopher Waller, a Fed governor
– Michelle Bowman, a Fed vice chair
– Philip Jefferson, a Fed vice chair
– Dallas Fed President Lorie Logan
– White House economist Kevin Hassett
– Kevin Warsh, former Fed governor
– Marc Sumerlin, former Bush administration official
– James Bullard, a former Fed official.
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Reference:
– Bessent on Fed Rate Cuts, Powell Replacements (Bloomberg)