Bezent publicly bombards the Federal Reserve for “misjudgment”: two-year US Treasury yields warn that interest rates are too high

The Zhitong Finance App learned that US Treasury Secretary Scott Bessent publicly questioned the judgment of Fed policymakers on interest rates on Thursday, and reiterated that the two-year US Treasury yield trend indicates that the benchmark interest rate level is too high.

“The Federal Open Market Committee (FOMC) appears to be biased in its interest rate decisions,” Basent said in an interview on Thursday.

Although Bezent repeatedly emphasized that he was only commenting on past monetary policy, he insisted that “two-year yields are sending a signal that overnight interest rates are too high.” Currently, the federal funds rate target range set by the Federal Reserve is 4.25% to 4.5%, while the two-year treasury yield has fallen back to around 3.76%.

When asked about Bill Pulte's appeal for Federal Reserve Chairman Powell to resign, the government's housing finance director, Beisent declined to comment, saying only that the Federal Reserve should “control spending like any other agency.” According to reports, Pulte previously accused Powell of making false statements about the Federal Reserve building renovation during congressional hearings.

Regarding Powell's successor after his term expires in May 2026, Bezent said “there are many excellent candidates.” When asked if he was interested in running for election, he said he “won't reveal the details of the private conversation.”

Furthermore, Bezent also hinted that he would like Powell to completely leave the Federal Reserve system in May next year — although Powell's term as a board member will last until 2028, if he chooses to remain in office after leaving office, he will only need to replace the seat of director Adrianne Kugler in January 2026.

“We are hopeful that two seats will be filled next year,” Bezent said.

As the House of Representatives reviews President Trump's iconic fiscal and taxation bill, Bezent pointed out that the legislation includes provisions to raise the federal debt ceiling, and that the $5 trillion increase “will ensure that fiscal operations continue until 2027.”

Since January, the US Treasury has continued to take special accounting measures to maintain federal solvency within the statutory debt limit. After the bill comes into effect, it is expected that additional short-term treasury bonds will be issued to supplement cash reserves.

Referring to a broader debt issuance strategy, Bessent said that since two-year US Treasury yields showed that overnight interest rates were too high, “we will take this factor into consideration,” but did not provide further details. He also mentioned, “Our debt management process is very regular and systematic, but we take these unforeseen circumstances into account.”

“In the next few months, we will decide how to structure the debt maturity,” he said. The Ministry of Finance's next quarterly financing announcement (usually announcing issuance strategy adjustments) is scheduled for July 30.