Treasury Secretary Bessent stated that additional Federal Reserve rate cuts are the final essential component needed to strengthen U.S. economic momentum, emphasizing their role in supporting growth and consumer spending.
- Federal funds rate at 5.25%
- Consumer spending grew 3.4% annualized in Q4 2025
- Business investment up 1.7% year-over-year
- Core inflation at 3.1%
- Two-year Treasury yield dropped to 4.8% post-comment
- S&P 500 rose 1.3% following remarks
Treasury Secretary Bessent reaffirmed on Thursday that lowering interest rates remains a critical policy lever for advancing U.S. economic expansion. Speaking during a press briefing, he underscored that current monetary conditions—despite progress in inflation control—are still too restrictive to unlock full growth potential. The administration's position centers on the belief that further reductions by the Federal Reserve could stimulate investment, ease borrowing costs for businesses and households, and bolster consumer confidence. With the federal funds rate currently held at 5.25%, Bessent noted that a gradual easing path would help maintain stability while promoting sustainable expansion. Recent data indicates consumer spending rose 3.4% annually in Q4 2025, but business investment remains subdued, growing at just 1.7% year-over-year. Bessent highlighted these figures as evidence that monetary policy should not remain static, especially given core inflation holding steady at 3.1%—close to the Fed’s 2% target but still above levels consistent with maximum employment. Market participants reacted swiftly, with Treasury yields dropping across the curve. The two-year note yield fell 12 basis points to 4.8%, while the 10-year dropped to 4.2%. Equity markets also climbed, with the S&P 500 gaining 1.3% following the comments, reflecting investor anticipation of looser financial conditions.