Treasury Secretary Urges Fed Cut Rates 50bps in September
US Treasury Secretary Basent advocated a 50-basis-point rate cut by the Federal Reserve at its September meeting, citing persistent structural issues within the central bank. Basent also expressed hope that nominee Milan is confirmed to the Fed Board before the September session to help accelerate policy decisions. The administration is actively recruiting candidates for Fed vacancies and praised former President Trump’s openness to restructuring the Fed. If incoming economic data remains consistent, Basent added, the Fed could move as early as June for an earlier rate cut. This intervention underscores government pressure on the Fed to pivot towards monetary easing amid evolving economic conditions.
Bullish
A proposal by the Treasury Secretary to cut rates typically signals looser monetary policy ahead. Lower interest rates reduce borrowing costs and can drive liquidity into risk assets like cryptocurrencies. Historically, Fed rate cuts in mid-2019 and during the COVID-19 response coincided with significant rallies in Bitcoin and Ethereum. In the short term, markets often price in anticipated easing, boosting crypto prices as traders seek higher yields. Over the long term, sustained low rates can underpin broader adoption of digital assets as investors diversify away from low-yielding fiat. While final decisions rest with the Fed, government pressure for rate cuts tends to reinforce bullish sentiment in crypto markets.