Trump teases he’ll fire Bessent if Fed doesn’t cut interest rates

By Samantha Waldenberg, Bryan Mena, CNN

(CNN) — President Donald Trump on Wednesday suggested he would fire Treasury Secretary Scott Bessent if the Federal Reserve doesn’t decrease interest rates.

“The only thing Scott is blowing it on is the Fed because the Fed, the rates are too high, Scott. If you don’t get it fixed fast, I’m going to fire your ass,” the president said, smirking, during a speech at a US-Saudi investment forum at the Kennedy Center in Washington, DC.

However, it won’t be easy for Trump to bend the Fed to his will: The Fed makes its decisions on interest rates independently, based solely on economic data, meaning that firing Bessent would simply not lead to lower rates. Several Fed officials have also said in recent public comments that they remain concerned about inflation, leaning against further rate cuts.

The president has been a frequent critic of the central bank and its chair, Jerome Powell, throughout his second term as the Federal Reserve declined to cut interest rates this year until September. But he acknowledged on Wednesday that Bessent has been privately urging him not to fire Powell, whom Trump has repeatedly said he wants out of the job.

Trump appeared to suggest that Bessent has been the “voice of reason,” while Commerce Secretary Howard Lutnick “is a little bit more for firing” Powell.

“Please don’t fire him. He’s got three months to go,’” the president said, appearing to repeat what Bessent has told him of Powell.

“I want to get him out,” Trump said, reenacting their conversation.

“I think Howard is a little bit more for firing him. I think Howard would say get him the hell out of there,” the president said

Bessent as a “voice of reason”

Trump frequently threatened to fire Powell during the spring, but the president eventually backed off from those threats after his closest advisers warned of the chaos in financial markets that could ensue if he were to do so, CNN previously reported.

Wednesday is the first time Trump has appeared to suggest that Bessent, who has become well-respected on Wall Street, was one of the voices urging him to keep Powell in his role until the end of his term.

“Markets have really appreciated having Bessent around,” James Ragan, director of wealth management research at DA Davidson, told CNN.

“He’s been very much the voice of reason in the Trump administration, so I don’t like to hear him challenging Bessent,” he added.

The Fed’s decision making and Trump’s demands

Fed officials say their decisions on rates are guided solely by what economic figures show, and they strive to achieve their dual mandate of full employment and stable prices. That’s precisely why Trump’s frequent demands for lower rates have largely fallen on deaf ears — and may continue to do so.

The Fed’s rate-setting committee, led by Powell as chair, began to lower interest rates in September for the first time in nine months, and delivered another quarter-point rate cut at its latest meeting last month. October’s rate cuts bring the benchmark lending rate to its lowest in three years.

The Fed has been lowering rates to prevent unemployment from surging, though officials are divided over whether they should continue to lower rates with inflation still above their 2% target and Trump’s tariffs still threatening to push inflation higher.

Minutes from the Fed’s October meeting underscored the heated debate among the policymakers of the world’s most powerful central bank, with several stating that they prefer to stand pat in December: “Many participants suggested that, under their economic outlooks, it would likely be appropriate to keep the target range unchanged for the rest of the year,” the minutes said.

Investors currently see a roughly 68% chance of the Fed holding rates steady next month, according to futures, compared to a 32% chance of another cut.

New data on the labor market’s health in September, which was delayed due to the government shutdown, is due on Thursday. Signs that the labor market is falling off a cliff would prompt the Fed to continue to lowering borrowing costs heading into next year, though officials are keeping a close eye on inflation.

How the Fed makes its decisions is no secret, but that hasn’t stopped Trump from repeatedly demanding aggressive rate cuts and lambasting Powell, whose term ends in May.

Trump could name Powell’s successor as early as December, and there are five people on his short list, according to Bessent, who has led the search. But even if Trump names a loyalist who would call for aggressive rate cuts, that still wouldn’t do the trick because the Fed chair only gets one vote and they cannot unilaterally veto what the majority of the Fed’s 12-person rate-setting committee decides.

The new Fed chair, whoever it may be, would have to persuade their colleagues to go along with any plans to lower rates aggressively, and at the moment, only one Fed official said he believes that is the right approach: Fed Governor Stephen Miran, who is taking an unpaid leave from his job as a top White House economist to temporarily serve on the Fed’s board.

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