Bessent Expresses Surprise at Powell’s Hesitation on Rate Cuts Amid Market Expectations

Federal Reserve Chair Jerome Powell's recent characterization of the 25 basis point rate cut as a "risk management" decision has disappointed advocates for more aggressive monetary easing. Powell emphasized the absence of a "risk-free path" for interest rates, balancing concerns over a softening labor market against persistent inflation risks.

Keybridge Capital's Scott Bessent countered this cautious stance, stating rates remain "too restrictive" and should decline by 100-150 basis points before year-end. Market pricing reflects this divergence, with CME's FedWatch tool showing 77.1% odds for two additional cuts in 2025—down slightly from last week but nearly double month-ago levels.

The Fed's internal divide mirrors this uncertainty, with some policymakers advocating preemptive cuts to stimulate growth while others prioritize inflation containment through higher rates. This policy ambiguity creates crosscurrents for risk assets, particularly cryptocurrencies that typically benefit from looser monetary conditions.