Bessent x Powell: Rate Cuts Are Back on the Table — But Not on Trump’s Terms

Treasury’s whispering “1–2 cuts.” Trump wants a 3-point crash. Deutsche says: chill, it won’t save much. Welcome to election-year monetary policy.

📌 Quick Stats

• 🔻 Expected Cuts: 1–2 in 2025, per Treasury Secretary Bessent
• ☕ Coordination: Weekly Powell–Bessent meetings over breakfast
• 💬 Trump’s Demand: 3% rate drop = 1T debt savings (claimed)
• 🧮 Reality Check: Deutsche Bank pegs savings at just 12–15B

💣 Rate Cuts Coming (But Not the Way Trump Wants)

U.S. Treasury Secretary Bessent just hinted at one or two rate cuts in 2025, citing slowing inflation and an evolving macro backdrop.

And he’s not freelancing — he’s having weekly coffees with Fed Chair Jerome Powell. The message? The Fed and Treasury are in sync, but not in Trump’s corner.

Because Trump? He wants something else entirely.

🧨 Trump’s Math: 3% Drop, 1 Trillion Saved?

Trump’s back at the mic, demanding a 3-point rate cut to slash debt servicing costs — claiming it would save the U.S. over 1 trillion.

But Deutsche Bank isn’t buying it.

According to chief economist Matthew Luzzetti, the math just doesn’t work:

• 🧾 Short-term rates would drop — yes
• 🔺 Long-term rates might spike (inflation panic, credibility hit)
• 💸 Net savings by 2027? Just 12–15 billion

So much for trillion-dollar quick wins.

🧠 The Bigger Game: Rates, Power, and Independence

This isn’t just about saving on interest.

It’s a stress test on Fed independence. Force the central bank to play politics, and markets lose trust fast.

Key insight from Deutsche: Lowering rates artificially can tank confidence, raising long-term yields even as short-term ones fall. That’s bad for:

• Treasury auctions
• Market stability
• Inflation anchors
• Institutional trust in the dollar

Bessent seems to get that. Hence: gradualism, not drama.

🏛️ Powell’s Still in Play — For Now

Despite Trump’s pressure, Powell hasn’t been ousted (yet).

Bessent’s quiet alignment with Powell suggests that:

• The Fed still holds its firepower
• Any rate cuts will follow data, not Twitter posts
• Fiscal strategy = monetary diplomacy, not policy war

Translation: expect soft pivots, not helicopter stimulus.

TL;DR

Treasury Secretary Bessent expects 1–2 Fed rate cuts in 2025, signaling cautious coordination with Chair Powell. Trump’s demand for a 3% slash to save 1T on debt? Deutsche Bank says that’s fantasy — real savings would be just 12–15B. Behind the scenes, Fed independence is being tested as markets weigh politics, inflation, and long-term credibility. The Powell-Bessent axis is holding, but the pressure’s rising.