U.S. Treasury Secretary Scott Bessent said Monday that the Federal Reserve should postpone cutting interest rates as crude oil climbs above $100 a barrel amid the ongoing war in Iran.
Speaking to Semafor Editor-in-Chief Ben Smith at the Semafor World Economy conference in Washington, DC, Bessent said he saw eventual scope for lower rates but that the current environment calls for caution. "Do I think rates should be lowered? Eventually. I think now that we have to wait and see," he told the conference.
The remarks mark a change from comments Bessent made in January, when he described rate reductions as "the only ingredient missing for even stronger economic growth" and urged Fed Chair Jerome Powell to accelerate cuts. On Monday he characterized the Fed as "doing the right thing by sitting and watching" to see how the conflict in Iran unfolds.
Bessent added that the U.S. economy had been "very strong" exiting January and February. He argued the recent jump in energy costs is unlikely to permanently shift consumer perceptions of the economy, saying: "If ever there was 'Team Transitory,' it's this. I don't believe this is going to get embedded into inflation expectations."
Last Friday, the U.S. government reported that inflation rose three times faster in March than it did in February, a change the government attributed in part to surging oil and gas prices. Measures of inflation that exclude food and energy climbed slightly less than forecasters had anticipated.
Market pricing in Fed funds futures shows investors expect the Federal Reserve to keep policy rates steady through the year, with only minimal probability assigned to an increase.
This account limits itself to the remarks and data cited at the conference and in the government report; it does not extend beyond those statements to predict future policy actions or macroeconomic trajectories.