Finance
Philadelphia Fed President Harker advocates for interest rate cut in September
Philadelphia Federal Reserve President Patrick Harker on Thursday provided a strong endorsement to an interest rate cut on the way September.
Speaking to CNBC from the Fed’s annual retreat in Jackson Hole, Wyoming, Harker gave the most direct statement yet from a central bank official that monetary policy easing is almost a certainty when officials meeting again in less than a month.
The position comes a day after minutes from the last Fed policy meeting gave a solid indication of a cut ahead, as officials gain more confidence in where inflation is headed and look to head off any potential weakness in the labor market.
“I think it means this September we need to start a process of moving rates down,” Harker told CNBC’s Steve Liesman during a “Squawk on the Street” interview. Harker said the Fed should ease “methodically and signal well in advance.”
With markets pricing in a 100% certainty of a quarter percentage point, or 25 basis point, cut, and about a 1-in-4 chance of a 50 basis point reduction, Harker said it’s still a toss-up in his mind.
“Right now, I’m not in the camp of 25 or 50. I need to see a couple more weeks of data,” he said.
The Fed has held its benchmark overnight borrowing rate in a range between 5.25%-5.5% since July 2023 as it tackles a lingering inflation problem. Markets briefly rebelled after the July Fed meeting when officials signaled they still had not seen enough evidence to start bringing down rates.
However, since then policymakers have acknowledged that it soon will be appropriate to ease. Harker said policy will be made independently of political concerns as the presidential election looms in the background.
“I am very proud of being at the Fed, where we are proud technocrats,” he said. “That’s our job. Our job is to look at the data and respond appropriately. When I look at the data as a proud technocrat, it’s time to start bringing rates down.”
Harker does not get a vote this year on the rate-setting Federal Open Market Committee but still has input at meetings. Another nonvoter, Kansas City Fed President Jeffrey Schmid, also spoke to CNBC on Thursday, offering a less direct take on the future of policy. Still, he leaned toward a cut ahead.
Schmid noted the rising unemployment rate as a factor in where things are going. A severe supply-demand mismatch in the labor market had helped fuel the run in inflation, pushing wages up and driving inflation expectations. In recent months, though, jobs indicators have cooled and the unemployment rate has climbed slowly but steadily.
“Having the labor market cool some is helping, but there’s work to do,” Schmid said. “I really do believe you’ve got to start looking at it a little bit harder relative to where this 3.5% [unemployment] number was and where it is today in the low 4s.”
However, Schmid said he believes banks have held up well under the high-rate environment and said he does not believe monetary policy is “over-restrictive.”
Harker next votes in 2026, while Schmid will get a vote next year.
Finance
Treasury Secretary Bessent says market woes are more about tech stock sell-off than Trump’s tariffs
Treasury Secretary Scott Bessent speaks to reporters outside the West Wing after doing a television interview on the North Lawn of the White House on March 13, 2025 in Washington, DC.
Andrew Harnik | Getty Images
Treasury Secretary Scott Bessent said Wednesday the sell-off in the stock market is due more to a sharp pullback in the biggest technology stocks instead of the protectionist policies coming from the Trump administration.
“I’m trying to be Secretary of Treasury, not a market commentator. What I would point out is that especially the Nasdaq peaked on DeepSeek day so that’s a Mag 7 problem, not a MAGA problem,” Bessent said on Bloomberg TV Wednesday evening.
Bessent was referring to Chinese AI startup DeepSeek, whose new language models sparked a rout in U.S. technology stocks in late January. The emergence of DeepSeek’s highly competitive and potentially much cheaper models stoked doubts about the billions that the big U.S. tech companies are spending on AI.
The so-called Magnificent 7 stocks — Apple, Amazon, Tesla, Alphabet, Microsoft, Meta and Nvidia — started selling off drastically, pulling the tech-heavy Nasdaq Composite into correction territory. The tech-heavy benchmark is down about 13% from its record high reached on December 16.
However, the secretary downplayed the impact from President Donald Trump’s steep tariffs, which caught many investors off guard and fueled fears of a re-acceleration in inflation, slower economic growth and even a recession. Many investors have blamed the tariff rollout for driving the S&P 500 briefly into correction territory from its record reached in late February. Wall Street defines a correction as a drop of 10% from a recent high.
S&P 500, YTD
Trump signed an aggressive “reciprocal tariff” policy at the White House Wednesday evening, slapping duties of at least 10% and even higher for some countries. The actions sparked a huge sell-off in the stock market overnight, with the S&P 500 futures declining nearly 4% and the blue-chip Dow Jones Industrial Average shedding 1,100 points. The losses will likely but the S&P 500 back into correction territory in Thursday’s session.
“It’s going to be fine if we put the best economic conditions in place,” Bessent said in a separate interview on Fox Wednesday evening. “If you go back and look, the stock market actually peaked on the [DeepSeek] Chinese AI announcement. So a lot of what we have seen has been just an idiosyncratic tech sell-off.”
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