Trump’s pressure for a rate cut from the Federal Reserve is growing. Treasury Secretary Scott Bessent said in a TV interview last week, “If you look at any model for the Fed Funds rate, it suggests that we should probably be 150, 175 basis points lower.”
Stephen Miran, who is Trump’s pick to fill a temporary opening on the Fed’s Board of Governors, argued in a CNBC interview that inflation is well-behaved. Miran, who is a strong supporter of Trump’s reciprocal tariffs, highlighted a new White House report that shows prices of imported goods had fallen between December 2024 and May 2025, though reciprocal tariffs were only announced in April.
Then, the WSJ reported the Trump Administration revealed that the list of candidates for Fed Chair would be expanding: “The hope is that a greater number of surrogates will take to the airwaves and publicly pressure the Fed to lower rates.”
The clincher was the July CPI report. Headline CPI came in a hair under expectations, and core CPI was a hair above expectations. The report set a risk-on stampede in the stock market in anticipation of a September rate cut, though the bond market reaction was far more cautious. In the end, the consensus view settled at a virtual certainty of a quarter-rate point cut at the September FOMC meeting, and a total of two cuts in 2025.
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