Fed Urged to Slash Rates Faster as Inflation Cools - Bessent’s Bold Call

Wall Street heavyweight pushes for aggressive monetary pivot as price pressures ease.

The Rate Cut Rally

Bessent's demanding the Fed stop dawdling and accelerate interest rate reductions. With inflation finally showing signs of cracking, the argument for gradual cuts looks increasingly timid—almost as timid as a traditional banker facing DeFi disruption.

Inflation's Retreat

Cooling price data gives policymakers room to maneuver. The numbers don't lie—unless you're looking at Wall Street earnings reports, then creative accounting becomes an art form.

Market Implications

Faster cuts could unleash capital flows into risk assets. Traditional finance might finally catch up to what crypto markets priced in months ago—that tight money policies were always temporary.

Because when central bankers move, they either lead the charge or get left watching from the sidelines—much like those still waiting for Bitcoin to 'prove itself' while it continues eating their lunch.

Easing inflation gives room for cuts

According to Bessent, inflation has cooled down more than expected, which gives the Federal Reserve some new powers. According to government data, consumer prices ROSE by just about 3% year-over-year in September. This is the slowest growth rate in more than two years and is only one percentage point above the Fed’s target of 2.0. 

The prices for energy and food, which contributed to the surge in prices over the last few years, have stabilized, and inflation in Core prices, that is, excluding the volatile items, continues to cool as well. 

Bessent said that, in his view, prices had already turned a corner and that keeping interest rates high was now doing more harm than good. He pointed out that the U.S. economy had clearly moved past the overheating phase and added that improvements in fiscal management provided another strong reason for the Federal Reserve to begin cutting rates.

The deficit for the GDP has shrunk from 6.4% to 5.9% due to Trump’s spending cuts, indicating that the government is consuming less through borrowing. This, Bessent told CNN, reduces the pressure on prices and makes more room for a looser monetary stance.

The CME FedWatch Tool’s futures pricing indicates that traders now expect a 70% chance of a rate cut by early 2026, up from 45% a month ago. Bond yields have also fallen significantly as investors start to believe that inflation is cool enough and that looser policy is no longer needed. 

Bessent joins the chorus of economists and markets that call for the Fed to shift gears. 

Fed Governor Stephen Miran, one of the two dissenting members, cautioned that keeping interest rates elevated for too long could alter the economy’s trajectory. He, along with a few other officials, had advocated for a 50-basis-point cut instead of the smaller 25-basis-point reduction that the central bank ultimately approved.

Fed’s cautious stance faces growing pressure

The Fed chair is pledging to hold off on further rate cuts this December, claiming that policymakers will need more proof of sustained disinflation before becoming more active. 

In the meantime, the stance is under attack by both the administration and the markets. Over the weeks to come, investors expect the Fed’s investment to be constrained, allowing rates to be cut more deeply in January 2026 if current circumstances persist. 

Economists argue that if the authorities postpone such cuts, it will exacerbate downturns in the housing sector and impede job development throughout other industries reliant on rates.

Still, Federal Reserve Governor Christopher Waller has reiterated his support for a rate cut at the Fed’s December meeting. In an interview, Waller noted, “The biggest concern we have right now is the labor market,” he told Larry Kudlow on Fox Business Network. “We know inflation is going to come back down, so this is why I’m still advocating that we cut policy rates in December, because that’s what all the data is telling me to do.”

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