Bizen publicly criticizes the Fed for "misjudgment": the 2-year US Treasury yield warns that interest rates are too high.

US Treasury Secretary Scott Benson publicly questioned the judgement of Federal Reserve policymakers on interest rates on Thursday, reiterating that the trend in the two-year Treasury yield indicates that the benchmark interest rate level is too high. During an interview on Thursday, Benson said, "The Federal Open Market Committee (FOMC) seems to have a bias in its interest rate decisions." Although Benson repeatedly emphasized that he only comments on past monetary policy, he insisted that "the two-year yield is signaling that the overnight rate is too high." Currently, the Federal Reserve has set a target range for the federal funds rate at 4.25%-4.5%, while the two-year Treasury yield has fallen to around 3.76%. When asked about Housing Finance Agency Bill Pulte's call for Fed Chairman Powell to resign, Benson declined to comment, only saying that the Fed should "control expenses like other agencies." Pulte had previously accused Powell of making false statements to Congress about the Fed building renovation. Regarding the succession of the next Fed chair after Powell's term expires in May 2026, Benson said, "There are several excellent candidates." When asked if he himself was considering running, he said, "I will not disclose private conversations." Furthermore, Benson hinted at his hope for Powell to completely leave the Fed system next May even though Powell's term as governor could last until 2028, if he chooses to stay on after stepping down as chair, he would only need to replace Governor Lael Brainard's seat in January 2026. Benson said, "We expect to fill two seats next year." As the House debates President Trump's signature tax legislation, Benson pointed out that the legislation includes provisions to raise the federal debt ceiling, a $5 trillion increase that "will ensure fiscal operations continue until 2027." Since January, the US Treasury has been taking special accounting measures to maintain federal payment capabilities within the statutory debt limit. With the enactment of the legislation, it is expected that short-term bonds will be issued to supplement cash reserves. Regarding broader debt issuance strategies, Benson said that considering the high overnight rate indicated by the two-year Treasury yield, "we will take this factor into consideration," but did not provide further specifics. He also mentioned, "Our debt management process is very regular and systematic, but we will consider these unforeseen circumstances." "We will decide how to set the debt maturity structure in the coming months," he said. The next quarterly financing announcement by the Treasury (which usually announces adjustments to issuance strategies) is scheduled for July 30th.