Treasury Secretary Scott Bessent delivered a forceful message to the Federal Reserve this week: the economy is poised for takeoff, but it needs cheaper money to get there.

Speaking before the Economic Club of Minnesota on Wednesday, Bessent framed interest rate cuts as the linchpin of President Trump's economic agenda, declaring that lower borrowing costs are "the only ingredient missing for even stronger economic growth."

A Direct Appeal to the Fed

Bessent's remarks represent the administration's most explicit push yet for the central bank to continue easing monetary policy. While presidents and Treasury secretaries have historically been cautious about commenting on Fed policy—respecting the institution's independence—Bessent showed no such restraint.

"Cutting interest rates will have a tangible impact on the lives of every Minnesotan," he told the audience. "Which is why the Fed should not delay."

The speech invoked former Federal Reserve Chairman Alan Greenspan, who Bessent praised for resisting premature rate hikes during the technology boom of the 1990s. "The open-mind maestro resisted premature rate hikes during the technology boom—and history proved him right," Bessent said.

Where Rates Stand Today

The Federal Reserve has already cut rates three times since September 2025, reducing the benchmark federal funds rate by 75 basis points to a range of 3.5% to 3.75%. But the pace of cuts has slowed dramatically, with markets now pricing in just two additional reductions in 2026.

Friday's jobs report reinforced the case for patience. The economy added 50,000 jobs in December, below the 70,000 economists expected, while the unemployment rate ticked down to 4.4%. The softer data pushed traders to price in a 97% probability that the Fed holds rates steady at its January 27-28 meeting.

The Inflation Factor

Complicating Bessent's case is the stubborn persistence of inflation. While headline inflation has cooled to around 2.7%, it remains above the Fed's 2% target. Core inflation, which strips out volatile food and energy prices, sits at 2.6%—its lowest since March 2021, but still elevated enough to give policymakers pause.

The December Consumer Price Index, scheduled for release Tuesday, will provide the next major data point for Fed officials weighing their next move.

The Fed Chair Question

Adding another layer of complexity is the looming transition at the top of the Federal Reserve. Chair Jerome Powell's term expires in May, and Bessent confirmed that President Trump plans to name a successor this month.

"I think right before or right after Davos—I think in January," Bessent said of the expected announcement, referring to the World Economic Forum gathering scheduled for January 19-23.

The Treasury secretary has reportedly whittled the candidate pool to five finalists. National Economic Council Director Kevin Hassett and former Fed Governor Kevin Warsh are considered the leading contenders, according to betting markets.

A Divided Fed

Bessent is not alone in calling for more aggressive easing. Fed Governor Stephen Miran has advocated for 150 basis points of cuts in 2026—double what markets currently expect—citing manageable inflation and growing concerns about the labor market.

But other Fed officials have struck a more cautious tone. Minutes from the December meeting showed policymakers increasingly divided on the appropriate pace of rate reductions, with some warning that sticky inflation warrants a wait-and-see approach.

What It Means for Your Money

If Bessent gets his wish and the Fed accelerates rate cuts, the implications would ripple across the economy:

  • Mortgage rates: Already below 6% following the administration's $200 billion mortgage bond purchase plan, home loan rates could fall further toward 5%
  • Savings accounts: High-yield savings rates, currently averaging around 4.5%, would decline as banks adjust to lower benchmark rates
  • Credit cards: Variable-rate credit card APRs, which track the federal funds rate, would gradually decrease
  • Stock market: Lower rates typically boost equity valuations, particularly for growth stocks and rate-sensitive sectors like real estate

The Bottom Line

Bessent's speech signals that the Trump administration views monetary policy as central to its economic strategy—and is willing to apply public pressure to achieve its goals. Whether the Fed responds remains to be seen.

For now, the central bank appears content to move cautiously, balancing the administration's calls for stimulus against the risk that cutting too quickly could reignite inflation. The next few months will reveal whether Bessent's "missing ingredient" gets added to the recipe—or whether the Fed charts its own course.