Where Is Bessent Pulling These Rate Models From?
They fly in the face of decades of rules and experience.
Treasury Secretary Scott Bessent during a Bloomberg Television interview.
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Scott Bessent, the US Treasury secretary, made big news on Blooomberg Surveillance. He told the televised audience that “if you look at any model” for the fed funds rate, it suggests that “we should probably be 150, 175 basis points lower.”
This is breathtaking. With the current effective fed funds rate at 4.33%, he is suggesting that it should be about 2.6%. Over the last 70 years, the rate has never been that low with inflation as high as it currently (with the core reading above 3%). So apparently “any” model now shows that US monetary policy has been misguided throughout that entire period and needs to be changed: