American Treasury Secretary Scott Bessent reveals a Trump government plan to reduce long -term interest without interfering with the Federal Reserve, focusing on the Treasuries market


Treasury Secretary Scott Bessent has submitted a new plan to reduce long -term interest in the United States without directly interfering with the Federal Reserve. According to CNN, the Trump government strategy focuses on reducing 10-year treasure performance, a key indicator that influences mortgage rates, credit cards and other types of loans.

On the fourth day of his term, President Donald Trump stated that he would require an immediate drop in interest rates and reaffirmed his knowledge of monetary policy.

Despite criticism of the Central Bank’s Fed and President Jerome Powell, the Trump administration insists that it does not seek to press the institution but to trace an independent path to influence long -term income.

“He is not asking the Fed to reduce rates,” Bessent said in an interview with Fox Business. According to him, the focus of the government lies in economic deregulation, the approval of a new tax package and the reduction of energy costs, factors that, according to the administration, would lead to a natural drop in rates and strengthening the dollar.

The decision of the Treasury to act directly on the performance of the 10 -year Treasuries, instead of depending on the actions of the Fed, is considered unusual.

“It is quite unusual to the Treasury Department and the White House try to directly influence long-term income,” said Ryan Depprick, Carson Group’s chief market strategist. “Historically, these actions are coordinated with the Fed, and management can only influence income indirectly through fiscal policy and deregulation.”

The fees that Americans pay on loans are linked to 10 -year treasuries performance, which may vary due to different factors, including geopolitical uncertainties.

During periods of instability, investors tend to buy more US government titles, considered safe assets, which reduces income and makes credit cheaper.

Bessent argues that the interest rates promoted by the Fed in the last year did not result in the expected drop in the 10 -year treasure income, which remained high even after multiple short -term interest rates.

Since Trump’s inauguration, 10 -year -old treasuries yield has shown a slight fall, something Bessent attributes to market perception that reducing public spending makes American debt less risky.

Last week, White House Secretary Karoline Leavitt said the government intends to end the waste of federal resources through the newly created Department of Government Efficiency, led by Tesla CEO Elon Musk.

The Trump government seeks to boost economic growth without generating inflation. The proposal of cuts in federal agencies and spending reduction aims to achieve this goal without pressuring prices, which would benefit the Treasuries market.

“They want robust growth, but they also want to limit inflationary expectations by demonstrating discipline in spending,” said José Torres, senior economist at Interactive Brokers. “Attention to 10 -year treasure performance reinforces the independence of monetary policy and minimizes political interference, which is a good precedent to be reaffirmed.”

Source: https://www.ocafezinho.com/2025/02/07/plano-de-scott-bessent-quer-derrubar-juros-sem-o-federal-reserve/

Leave a Reply