Ahead of Crucial Interest Rate Meeting, Besant Once Again "Fires Shots" at the Fed

Ahead of the Federal Reserve's interest rate meeting, U.S. Treasury Secretary Scott Besant once again "fired shots," stating that the central bank has consistently "fallen behind the curve."

In an interview on Tuesday, Besant pointed out that a 25 basis point rate cut has already been priced in by the market, and the market is now expecting a total of 75 basis points in rate cuts from now until the end of the year.

He also mentioned that the key issue is whether the Fed will adopt a neutral or accommodative stance. He noted that "the front end of the yield curve has inverted," indicating market expectations for monetary policy easing.

The U.S. Senate voted on Monday evening to approve Milan's nomination to the Federal Reserve Board, with the vote largely following party lines. According to the Fed's statement, Milan was sworn in as a Fed governor before the Federal Open Market Committee (FOMC) meeting, meaning he will participate in this week's interest rate meeting.

Besant also discussed his recent meeting with former St. Louis Fed President James Bullard (one of the top candidates for the next Fed chair), describing it as a "very pleasant meeting" and noting that Bullard "has a deep understanding of the Fed."

The Fed is scheduled to hold its monetary policy meeting on September 16-17. It is widely expected that the Fed will implement its first rate cut in nine months, with a reduction of 25 basis points. This would be the first rate cut of the year.

Last month, Besant stated that the Fed might undertake a series of rate cuts, starting with a 50 basis point cut in September. He argued that, regardless of the model used, the Fed's interest rate should be 150 to 175 basis points lower than current levels. His comments sparked widespread controversy and skepticism. Some analysts noted that they would not recommend such significant rate cuts unless a recession is observed.