According to reports by Bloomberg and Reuters on May 1, U.S. Treasury Secretary Bassent said in an interview on the same day that the U.S. Treasury market is signaling that the Federal Reserve should cut interest rates.

On the same day, Bassent told Fox Business Channel, "We see that the two-year interest rate is now lower than the federal funds rate. Therefore, this is a market signal indicating that the Federal Reserve should cut interest rates."

By 7:58 a.m. Eastern Time on the same day, the yield on two-year U.S. Treasury notes was 3.58%, while the benchmark federal funds rate was 4.33%. The Federal Reserve currently has its federal funds rate target range set at 4.25% to 4.50%.

The Fed stated that it currently has no plans to cut interest rates, citing reasons such as considering that the inflation rate is still higher than the 2% target, and the risk of Trump's government tariff policies driving up prices.

The Federal Reserve will hold its next interest rate decision meeting on May 7, and virtually all economists predict that the Fed will maintain interest rates unchanged. Previously, Trump has repeatedly urged the Fed to cut interest rates.

U.S. Treasury Secretary Bassent. Reuters

Bassent also said on April 1st that over time and with the conclusion of trade agreements, the "gaps" of tariff uncertainty would narrow. He said that despite the stock market being sold off in April, the overall performance for the month was basically flat.

"The market completed an incredible round-trip journey in April," Bassent said. "When we reach our destination, the path will be worthwhile, and in the short term, I believe everyone should take a deep breath."

After three interest rate cuts in 2024, due to rising inflation risks, the Fed has kept interest rates unchanged so far this year. Trump expressed great dissatisfaction with the Fed, saying that Chairman Powell's reluctance to cut interest rates is "playing politics."

A recent report by some media outlets said that Trump has been discussing the possibility of dismissing Powell prematurely for several months, although such action is almost legally unsupported.

The New York Times analysis pointed out that investors generally prefer low interest rates because they make it easier for businesses to borrow and expand operations. However, markets have fallen after recent calls from Trump for interest rate cuts, indicating that investors believe the threat to the Fed's independence outweighs any benefits brought by the cuts.

The report noted that the Fed's independence is considered crucial in global financial markets, and threats to this independence are causing investors to worry about the stability of assets denominated in dollars.

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Original source: https://www.toutiao.com/article/7499472228665344531/

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