Treasury Secretary says Fed can wait on rate cuts, even as he keeps pushing for them

By TheStreet Roundtable

1 day ago

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Treasury Secretary Scott Bessent told reporters last week that he still wants the Federal Reserve to cut interest rates, but that he understands if policymakers wait for the economic picture to clear up first.

Speaking on April 14 at the Semafor World Economy Conference in Washington, D.C., Bessent laid out a position that sits between the Trump administration’s long-running demand for lower rates and the reality of an inflation print shaped by a war that began less than two months ago.

“I am highly confident that the core inflation ... which is quite under control and actually dropping in many categories, will continue to go down,” Bessent said, according to CNBC. “I believe rates should be cut, but that if they want to wait for some clarity, I understand that.”

The comment was a step back from what Bessent said a day earlier at the same conference.

On April 13, asked whether rates should be lowered, Bessent said: “Eventually. I think now that we have to wait and see.” By Tuesday he was clarifying the remark to reporters, telling Reuters and other outlets that “the impetus here is they will need to cut rates,” and that his earlier comment was about observation, not policy.

Both versions point in the same direction. The Treasury still wants cuts. It just no longer wants to fight the Fed over timing.

Why the walk-back matters

For most of the second Trump administration, Bessent and the White House have pushed the Federal Reserve hard to lower borrowing costs.

President Donald Trump has repeatedly called on Chair Jerome Powell to cut rates to 1% or lower. Bessent, in January 2026, said rate reductions were “the only ingredient missing for even stronger economic growth” and urged Powell to move faster. Trump signaled late last year that his incoming Fed Chair would cut rates “by a lot”, a message that briefly sent Bitcoin surging toward $90,000 on the promise of looser policy.

Fed Chair Jerome Powell takes questions during a press conference following the Federal Open Markets Committee meeting on March 18, 2026 in Washington, DC.

Consumer prices rose 0.9% in March and producer prices climbed 0.5%, with most of the gain tied to soaring energy costs following the start of the Iran war in late February. Year-over-year, headline inflation hit 3.3% in March, the biggest jump since May 2024, according to Bureau of Labor Statistics data.

Core inflation, which strips out food and energy, was far tamer, with consumer-side core prices up just 0.2% on the month and wholesale core up 0.1%.

Bessent is betting that the headline number is a one-time energy shock tied to the Strait of Hormuz blockade and that core inflation, which tracks the underlying trend, keeps easing. If he is right, the Fed has cover to resume cutting later this year. If he is wrong, the central bank may end up doing the opposite of what the White House wants.

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Where the Fed actually stands

The Federal Open Market Committee has held the federal funds target range at 3.50% to 3.75% through both of its 2026 meetings so far.

The January 28 decision came after three consecutive quarter-point cuts in the final meetings of 2025, and the March 17-18 meeting confirmed the pause, with the committee citing elevated inflation and geopolitical uncertainty as reasons to hold steady. Powell at that meeting delivered what analysts called a “hawkish hold,” signaling the Fed needs more evidence before easing.

The Fed’s March Summary of Economic Projections, or dot plot, still points to a single quarter-point cut in 2026 and another in 2027.

Traders are pricing in something slightly more generous. The CME Group FedWatch tool on April 14 showed two quarter-point cuts priced in for this year, one in October and one in December. Prediction market Kalshi, meanwhile, has seen the probability of zero cuts in 2026 climb to around 40% in recent weeks, and Wells Fargo formally revised its outlook on April 6 to no longer expect any rate cuts this year.

The IMF is even more cautious. Its latest projection, flagged in a recent TheStreet breakdown, shows the fed funds rate moving from just 3.6% to 3.4% across 2026, barely one cut’s worth of easing for the entire year. The IMF Executive Board said monetary easing would only be appropriate “in the event of a material worsening in labor market prospects alongside a decline in inflationary pressures.”

The next FOMC meeting is on April 28-29. It is the last policy decision Powell is expected to preside over before his term ends on May 15. The Trump administration has nominated former Fed governor Kevin Warsh, whom Bessent helped select, to replace Powell. Warsh is widely expected to favor faster rate cuts. His confirmation is in doubt after Sen. Thom Tillis, R-N.C., said he would block a Senate vote until U.S. Attorney Jeanine Pirro ends a criminal probe into Powell tied to Federal Reserve building cost overruns, a probe Powell has publicly described as an attempt to pressure him over rate policy.

If Warsh is not confirmed by May 15, Powell may stay on as chair pro tem. Asked whether the administration would accept that scenario, Bessent told Reuters: “We want Kevin Warsh in as soon as possible.”

Why crypto should care about any of this

The crypto market has spent most of 2026 trading the Fed as much as it trades anything else.

The reasons are mechanical. Lower rates mean cheaper money, higher liquidity, and historically more appetite for risk assets, including Bitcoin and Ether. Higher rates do the reverse. They pull capital into safe yields like Treasuries and away from speculative positions.

That link has been visible in the tape. When the Fed held rates on January 28, Bitcoin slid from a Tuesday high near $90,400 to $83,383 by Thursday, a 7.3% drop in 48 hours, according to CoinGecko’s analysis of the decision. Bitcoin posted negative 48-hour returns after seven of eight FOMC meetings in 2025, a pattern Two Prime data cited by CoinDesk called a consistent “sell the news” reaction regardless of whether the Fed cut or held.

Positioning ahead of the March decision told the same story. Binance saw a $2.2 billion inflow in Tether on March 18, the largest single-day stablecoin deposit since November 2025, as traders loaded up dry powder for a Fed-driven move that never came.

The April 28-29 meeting drops into a market that has already taken a beating. Bitcoin and crypto broadly have been the weakest major asset class of early 2026. Aave just lost $6.6 billion in deposits over the weekend after a bridge exploit at Kelp DAO left the lending protocol carrying up to $200 million in bad debt. Liquidity has been thinning across DeFi. A dovish Fed, or even a dovish signal from Powell’s press conference, would land on a market that badly needs a reason to bid.

What to watch next

The April 28-29 FOMC decision is the next firm catalyst.

Between now and then, three things matter for both rates and crypto.

The first is whether the Iran conflict produces another oil shock or a durable de-escalation. Bessent has bet publicly that prices normalize quickly once the war ends. The oil market is not yet convinced.

The second is the April inflation print, which will land in early May and show whether core inflation is indeed cooling as Bessent claims.

The third is the Warsh confirmation timeline. A Powell-to-Warsh handoff compresses the Fed’s decision-making into a window where leadership itself is uncertain.