April 13 - U.S. Treasury Secretary Scott Bessent told Semafor Editor-in-Chief Ben Smith on Monday that the Federal Reserve should "wait and see" before deciding whether to reduce interest rates, citing uncertainty created by the war in Iran.
Bessent described the U.S. economy as "very strong" in January and February and said the central bank is "doing the right thing by sitting and watching" how the conflict develops. He framed patience as a prudent approach to policy while geopolitical risks remain elevated.
On the prospect of other central banks shifting policy, Bessent said he would be surprised if the European Central Bank moved to hike rates. He also contrasted U.S. policy with measures in some foreign markets, noting that "many European countries, (such as) the UK, and Asian countries, are subsidizing demand, which we haven’t done in the U.S."
Addressing recent price dynamics, Bessent said he is confident that the spike in prices will not become "embedded into inflation expectations." The comments came as U.S. consumer prices experienced their largest monthly increase in nearly four years in March nL1N40S16S, a jump linked in part to record rises in gasoline and diesel costs amid the conflict with Iran.
The war has pushed global crude oil prices up by more than 30 percent, and the national average retail price for gasoline has climbed above $4 a gallon for the first time in over three years. Those energy price moves coincided with a reported decline in President Donald Trump’s approval ratings as public dissatisfaction grew over his handling of the economy.
When asked whether the war in Iran would ultimately be beneficial or harmful for the U.S. economy, Bessent offered a cautious, noncommittal view: "I think we will look back and say - I don’t know the number of days - whether it’s 50 or 100 or more (days) for 50 years of stability." His response emphasized the difficulty of placing a timeline on geopolitical shocks and their long-term economic implications.
Context and implications
Bessent's remarks underscore a preference for central-bank vigilance amid an external supply shock that has materially affected energy prices and headline inflation. His comments also highlight policy divergence between the U.S. and some foreign governments that have chosen to subsidize demand amid rising fuel costs.