Bessent said that while the overall U.S. economy remains strong, high mortgage rates continue to hamper the housing market. Housing, he said, is effectively in a recession that is affecting low-end consumers the most, because they have debt, not assets.
Pending home sales in the United States remained stable in September, according to the National Association of Realtors.
The Treasury Secretary called the overall economic environment a transition period.
Fed Chair Jerome Powell said last week that the central bank may not cut rates further at its December meeting, prompting harsh criticism from Bessent and other officials in Donald Trump’s administration.
Federal Reserve Governor Stephen Miran, who is permitted to withdraw from his role as chairman of the White House Council of Economic Advisers, said in an interview with the New York Times published on Saturday that the Fed risked inducing a recession if it did not quickly lower interest rates.
Miran, who will return to his White House role in January, was one of two central bank governors who dissented from the Fed’s decision last week to lower interest rates by 25 basis points, advocating instead a cut of 50 basis points, or 0.5 percentage points.
“If such a restrictive policy is maintained for a long period of time, there is a risk that monetary policy itself will induce a recession,” Miran said in the interview with the New York Times on Friday. “I see no reason to take that risk if I’m not worried about rising inflation.”
Bessent echoed that view, saying the Trump administration’s cuts to government spending had helped reduce the deficit-to-gross domestic product ratio to 5.9% from 6.4%, which in turn should help reduce inflation. The Fed can also help by continuing to lower interest rates, he added.
“If spending contracts, inflation will decrease. If inflation decreases, the Federal Reserve should lower rates,” he said.
