President Trump has repeatedly demanded lower interest rates, echoing his 2018 style of “jawboning” the Federal Reserve. However, his administration now appears to be taking a more subtle approach.
According to Treasury Secretary Scott Bessent, the goal is to bring long-term interest rates down, not solely through Fed rate cuts. The Fed controls short-term rates, while longer-term rates are set in the open market and reflect investors’ expectations of economic growth.
Bessent argues that what the economy needs is a focus on deregulation and fiscal policies that improve supply-side potential, rather than further rate cuts from the Fed. The president’s stance has shifted since his previous criticism of the Fed for raising interest rates, with Bessent stating that Trump wants to see lower yields in the 10-year Treasury.
Bessent emphasizes that the administration is not seeking direct action from the Fed but instead believes deregulation and other policies will allow long-term rates to stabilize. He notes that energy prices are expected to be lower and non-inflationary growth can occur without higher interest rates.
The Trump administration’s stance differs from its previous criticism of the Biden administration’s debt issuance policy, which also focused on long-term rates. This time around, the Treasury Department issued a balance of short-term and long-term securities, contributing to a drop in longer-term yields.
While President Trump seeks lower interest rates, it is essential to note that he does not directly control borrowing costs. The Fed’s actions and global investors’ expectations play a significant role in determining long-term interest rates.
Source: https://www.axios.com/2025/02/06/trump-bessent-fed-rates-policy