Fed Chair Candidate David Zervos Backs Trump And Bessent's Calls For Rate Cuts, Says Policy Is Too Restrictive

David Zervos, one of the 11 Federal Reserve Chair candidates, on Wednesday backed President Donald Trump and Treasury Secretary Scott Bessent’s calls for interest rate cuts.

In an interview with CNBC, Zervos, who is currently the Chief Market Strategist for Jefferies, said the Fed’s current monetary policy is too restrictive.

“The Balance Sheet of the Fed has now contracted to the point of almost being neutral after being very stimulative for a very long time. And so you're left with rates at a much more restrictive rate without that extra kicker from the Balance Sheet,” Zervos said in the interview.

“We really need to get rates back to a more neutral level,” he stated, while adding that a way needs to be found to make this argument to the members of the Federal Open Market Committee (FOMC) to bring them around to the idea that interest rates need to be eased up to an extent.

As for the Fed’s dual mandate of maximum employment and stable prices, Zervos said it’s the “art of central banking” and that the institution looks at the future to understand what inflationary pressures are that could have an impact on the economy.

This comes after Bessent announced on Tuesday that he will likely begin interviews of potential candidates for Federal Reserve Chair after Labor Day. He also said he would work to trim down the list of 11 candidates, which includes Zervos, to a smaller one before presenting it to President Donald Trump for further consideration.

Meanwhile, U.S. equities edged lower in Wednesday’s pre-market session. At the time of writing, the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 index, was down 0.09%, while the Invesco QQQ Trust (QQQ) fell 0.21%. Retail sentiment around the S&P 500 ETF on Stocktwits was in the ‘bearish’ territory.

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