Treasury Secretary Scott Bessent Talks the Future of the Fed

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We begin this hour in Washington, President Trump leaving the door open for trade talks and piling on the pressure for the Fed to cut interest rates.

We're still willing to talk.

Literally every country wants to make it dew we have no inflation or stock market hit record highs.

With no inflation, we should be at one percent.

Thanks as well to Treasure Secretary Scott Besson, who's doing a fantastic job. He goes on television, he calms the market.

I go on television. I rile the market.

It's time for some calm. Joining us now the seventy ninth Secretary of the Treasury, Scale Besson. Mister secretary, welcome to the program sir. Let's pick up on that theme, not you calm in the markets, but on inflation and where rates should be. As I'm repointed out, we've had a string of softer and expected inflation reads in this country. We've had four, we might get five at a thirty Eastern time. Why do you believe that signal and non noise?

Well, I mean there's some persistence there, Jonathan, And look, I do have access to the number of the night before but when I'm coming on TV, I don't look at it. So I don't know what the number is going to be at eight thirty, and I wouldn't. I don't know whether it's going to be down, up or flat, but I wouldn't put too much emphasis on one number.

And there are some people on the FMC the Federal Reserve still worried about the prospect of that happening. Through the summer, We've all sensed the frustration from the White House across the administration with FED Chair J Powell, and a lot of confusion. I think at this point that maybe we can address in this conversation, is firing the Federal Reserve Chair under active consider in the White House and the Treasury in your administration.

President Trump said numerous times he's not going to fire J. Powell. You know, he's working the refs. And I've said before I'm a basketball fan. There are two schools of working the refs. There's the Bobby Knight school, and there's the Dean Smith School. President Trump seems to prefer the Bobby Knight school. And I'll tell you, I went back over the weekend and looked, and Bobby Knight won three NCAA championships. My hero Dean Smith only won two.

The NCAT director, Kevin Hasset, I'm not sure what you'd call him, but he was asked over the weekend, can the FED chair be fired? He said, that's the thing that's being looked into. How should we understand those comments?

Look, and I will point out Kevin was a collegiate basketball player, and I think, as President Trump said, he's not looking to fire a chair. And as I've said, I'm not going to come I'm not going to comment on future policy or future mistakes the federal make. I'll only comment on past mistakes. And look, they've had some big forecasting errors and this may be one. Now.

Is there a reason for not firing Kim? And I asked that question because the President's also said that his term is about to expire in May of next year. Is that the reason to ultimately just wait? Or is it something cal so you convinced by the negative consequences associates it with such a move.

Look, I think an independent central bank is very important for the conduct of monetary policy, and we can see that in terms of both the financial markets, the term premium and longer term debt.

You said previously the interview process would begin later on in the fall. There's been plenty of speculation as to whether that process would be brought forward, mister Secretary, Do you still, as far as you understand, believe that's when the INTERVIEWSS to replace the FED chair will begin in the fall, or as a formal process already started.

Well, look, there's a formal process that's already starting. There are a lot of great candidates, and we'll see how rapidly it progresses. It's President Trump's decision and it will move at his speed.

Do you see any merits at all and selecting maybe a candidate that's already on the committee on the FMC versus taking a look at someone outside of the Federal Reserve.

Again, there are a lot of good candidates inside and outside the Federal Reserve.

Jonathan has the chairman himself, the FED Chair, Jake pal given you any indication whatsoever as to what he would do once his term has expired, will if a as the governor at the Federal Reserve.

Well, traditionally the FED chair also steps down as a governor, and there's been a lot of talk of a shadow FED chair causing confusion in it events of his or her nomination, And I can tell you I think it'd be very confusing for the market for a former FED chair to stay on.

Also, mister Treasury Secretary, I love to talk to you about what's going on in Video. This morning, Jensen Wang, the CEO, out in a blog statement saying that the company has quote provided an update to customers, noting that in Nvidia is finding applications to sell the H twenty GPU again. The US government has assured the company that licenses will be granted and then Video hopes to start deliveries soon. Can you a test whether that that's true

Well again, I emrie. I think that'd be a judgment that the Chinese indigenous manufacturers, namely Huawei and some others already have an equivalent chip. So if there's an equivalent chip, then the DAH twenty could be sold because I can tell you the one thing that we do not want is a digital Belton road springing up around the world because other countries or China are substituting for our American chip manufacturers.

This is the same chip though, that the Trump administration blocked with export controls in April. So why the change in policy now.

Emery, You might say that that was a negotiating chip that we used in Geneva and in London.

So this was part of the trade talks when it comes to Washington and Beijing. Yes, was it a quid pro quo then, as you said, it wasn't, But was it potentially to make sure that you can get the licenses when it comes to rare earths.

I think it was all part of a mosaic. They had things we wanted, we have things they wanted, and we're in a very good place. I expect to meet my Chinese counterpart, the Vice premiere, in the next few weeks.

So when and where will that meeting take place.

We're still working on that. The Chinese leadership has a big conclave at the beginning of August, so we're trying to work out whether that could be in a third country before or after that conclave?

Well, the administration released the framework of the Geneva and London talks.

Well, we have released some of it, and I'll tell you that now having settled on tariffs on the export controls, we can move on to the next stage of talks. And I think it's very important both for the global economy, for the US economy and for the Chinese economy, for US to move on and talk about China opening its markets and the increase domestic and consumer production.

There.

Are you hoping to get to that next phase before August twelfth, when that's currently the day taunt between these two economies.

Yeah, Look, I think we're in a very good place. And I tell market participants not to worry about August twelfth.

Should they worry about what's happening with Europe with respect to the thirty percent teriff rate. They don't seem to be worrying. But I'm just curious whether that's the final rate or whether the letter was part of a negotiation that Europe received from President Trump.

Well, Lisa, you know what I would say is President Trump's able to create a lot of leverage here, A lot of leverage because he's indifferent. He's indifferent whether we take in the thirty percent rate or whether the Europeans come to us with a much better deal. As I've been saying for a while that if countries or trading blocks don't come with their best deals, then the rates

There is a theory in markets, and you don't even have to calm them. They're pretty calm. They're watching all of these rates and they're not freaking out in parlance on Wall Street, They're taking this in stride. We're close to all time highs, if not at all time highs. Do you see this as giving a green light to Trump? To President Trump to keep going, to take hardline approaches, and to keep trying to get better and better deals.

Look, I think this narrative of this subsessive focus on the market isn't right. President Trump views this as a generational opportunity to reset trade in a fair and sound manner for the American people. So the idea that some market ups or downs are going to be the deciding factor here. What we are concerned about, and President Trump is laser focused on, is getting the best deals because we were not having fair trade and now we're seeing with these countries coming to the table, the quality of

If you do get some sort of signal from the market though that this isn't going to be good for the US economy, Is there a trigger point? Is there sort of a sense at which it acts as a gut check of pulls back some of the negotiating tactics.

Look, I think that the market understands what we're doing. Sometimes individual market people don't, sometimes the television personalities don't. But good thing about President Trump is he always tells you what he wants and what he wants his fair trade here.

I won't take that as a slight on me and my colleagues around the table, mister Treasury Secretary. But you did tell me on April second, on Liberation Day, that this was the ceiling when it comes to those rates. But since then we have actually had some tariff rates the President announced in letters higher than those rates he announced on that big chart on April second. So is there no longer a ceiling when it comes to tariff rates when you are dealing with trading partners.

I think that I said, if they come and they negotiate in good faith in those are ceilings. And some of the talks got off to very very slow starts.

So who's negotiating good faith at this moment? Who's not?

Again? I congratulated the UK the other day, as I told many of our trading partners, and Anne Marie I may have said on that day or a few days after April second, I'd advise countries to move quickly because the President Trump the first deals are usually the best deals, and the UK came in early, they got a great deal, and everybody else is kind of dragging right now.

Well, when it comes to Japan, you're headed there at the end of this week, do you expect to come back with a deal.

I'm going to Japan to represent the United States government and the American people at the International Expo, which we used to know as the World's fairst So this coming Saturday is going to be America's Day, and I'll be taking a delegation includes the Labor Secretary, Deputy Secretary of State will be representing the US. This is a celebration of the US more than trade.

Talks, MISSUS Secretary. Before you go, just to final question, I'm embarrassed to say that my knowledge of college basketball is nothing like yours, but I can tell you back in the nineties in English football, there used to be a concept of player managers. There used to be certain managers of football teams that also put themselves on the field, and they play too effectively. They had two jobs. And I'm wandering from your perspective whether that's something you'd be

Look, I think I have the best job in town. I will do what President Trump wants. We got a lot of great FED candidates and I'm confident it's going to be a robot process.

Jonathan, has he asked you, what's that? Has he asked you? Are you part of the process.

I am part of the decision making process, but again it's the final decision.

Is going to be President Trump's secretary. I appreciate your time. Thank you. The Treasury Secretary there Skyll Beson on a range of issues, including trade and the future of this federal Reserve.