Bessent ups pressure on Fed to slash interest rates

US Treasury Secretary Scott Bessent fuelled US rate cut hopes yesterday as he piled pressure on the Federal Reserve to act.

He said rates should be cut by half a percentage point next month – in the latest attempt to sway the central bank by the Trump administration.

Global markets continued to surge following his comments, cementing a rally sparked by this week’s lower-than-expected US inflation figures for July.

Trump has pressed the Fed to lower interest rates and launched several attacks on chairman Jerome Powell.

The FTSE 100 came close to a record high yesterday, reaching nearly 9183 points in early trading, before closing at 9165.23 – 0.2 per cent up on the day. European indices also rose and New York markets extended gains after scaling new peaks on Tuesday.

The pound was buoyed by the prospect of a US rate cut at a time when another Bank of England move this year seems to be fading. Sterling shot nearly a cent higher versus the dollar to just under $1.36, a three-week high.

Bessent said: ‘I think we could go into a series of rate cuts here, starting with a 50-basis point [half percentage point] rate cut in September. If you look at any model [it suggests that] we should probably be 150, 175 basis points lower.’

The Fed kept its benchmark rate at a target range of 4.25 to 4.5pc in July. But Bessent yesterday said policymakers might well have cut rates in June and July had they been aware of the downwardly revised labour market data.