Fed Bets: Market Pricing 75-Bps-Rate Cut By 2025, Says US Treasury Secretary

US Treasury Secretary Scott Bessent said on Tuesday that the markets are anticipating significant monetary easing from the Federal Reserve this year and are projecting as much as 75 basis points of rate cuts.

Bessent remarked that the Fed had been behind the curve. He also noted that a 25-bps reduction is already priced in by investors,

“The market is pricing 75 basis points between now and year-end," he said while speaking in an interview with CNBC on Tuesday, adding that the central bank’s next challenge is deciding whether to steer policy towards a neutral or accommodative stance.

Bessent in the interview also highlighted that the very front end of the curve is inverted, signalling expectations of a dovish shift in US monetary policy.

Turning to US-China relations, Bessent expects Presidents Donald Trump and Xi Jinping to reach a "final deal" over TikTok, with the commercial terms likely to be disclosed in the coming days.

He also added that the terms of the deal are satisfactory for US interest. He also revealed that US officials had voiced disappointment on Nvidia to Chinese counterparts. However, he clarified that the issue did not disrupt broader trade discussions. Another round of talks with Chinese officials is scheduled in Frankfurt ahead of the Nov. 10 timeline.

This follows Trump's post on Truth Social on Monday where he said, "A deal was also reached on a "certain company that young people in our Country very much wanted to save". This indicates that the decision is likely in the favour of the youth wanting to save the application.

However, this could likely be in contrast to his statement on Sunday, where he told reporters that his administration was willing to let the application die.