US Treasury Secretary Calls for Half-Point Interest Rate Cut

US Treasury Secretary Scott Bessent has joined the calls for a half-point interest rate cut at the next Federal Reserve meeting, citing weaker job growth data and continued low inflation. This move comes as global stocks rallied and US markets reached new all-time highs following a steady inflation rate in July. The Fed left interest rates unchanged on July 30, but Bessent believes they could have been cutting rates as early as June.

Key Takeaways:

• US Treasury Secretary Scott Bessent is calling for a half-point interest rate cut at the next Federal Reserve meeting, citing weaker job growth data and low inflation.
• The US inflation rate remained steady at 2.7% in July, with core inflation at 3.1% and goods prices more subdued than services inflation.
• Despite Donald Trump's tariff hikes, investors' bets on a rate cut in September increased, with the S&P 500 and Nasdaq reaching new all-time highs.
• The dollar has slipped 0.1% against a basket of major currencies, with the S&P 500 up 1.1% and the Nasdaq 1.4% respectively.
• The yield on 30-year German government bonds has decreased after Tuesday's sell-off, with analysts citing Dutch pension reforms and increased government spending.
• Markets are now focusing on the summit between Trump and Vladimir Putin in Alaska to discuss ending Russia's war in Ukraine.

Statistics:

• US inflation rate: 2.7% (July)
• Core inflation rate: 3.1% (July)
• Goods prices: more subdued than services inflation
• S&P 500: up 1.1% to new all-time highs
• Nasdaq: up 1.4% to new all-time highs
• Yield on 30-year German government bonds: down after Tuesday's sell-off
• Observations: Dollar slipped 0.1% against a basket of other major currencies

Sources:

• Julia Kollewe, 7.56am BST (Introduction)
• Scott Bessent interview on Fox Business (no date specified)
• Ipek Ozkardeskaya, senior analyst at Swissquote Bank (no date specified)
• Photograph: Noam Galai/Getty Images (no date specified)