Summary: US Treasury Secretary Scott Bessent told Semafor Editor-in-Chief Ben Smith at the Semafor World Economy event in Washington that the Federal Reserve should wait before cutting interest rates as the war in Iran continues to evolve. He said the Fed is "doing the right thing by sitting and watching" how the conflict plays out and expressed confidence that recent price increases will not permanently change consumer expectations.
Bessent reiterated that rate reductions are appropriate at some point - "Do I think rates should be lowered? Eventually. I think now that we have to wait and see," he said, emphasizing timing matters amid geopolitical uncertainty.
Speaking at the event, he noted the economy's momentum earlier in the year, saying it was "very strong coming out of January and February." He also signaled that short-term price moves are unlikely to become embedded in long-term sentiment. "If ever there was 'Team Transitory,' it's this," Bessent said. "I don't believe this is going to get embedded into inflation expectations."
The US government reported on Friday that inflation rose three times faster in March than it did in February amid surging oil and gas costs. Meanwhile, inflation excluding food and energy rose slightly less than forecasters had anticipated.
On the political front, Bessent noted that President Donald Trump has spent much of his second administration urging the central bank to cut rates, a point he referenced while discussing the appropriate policy stance in the current environment.
When asked whether the war in Iran would ultimately be beneficial or harmful to the US economy, Bessent said he expects the country will look back and see 50 years of stability, though he did not specify the number of days the conflict might last.
Turning to growth forecasts, Bessent recalled that in February he had expected the economy would have grown more than 4% this year. Asked if that view still held, he said the economy "will have some make-up to do," suggesting that earlier expectations may require revision as the year progresses.
Contextual notes:
- The remarks were made at the Semafor World Economy event in Washington.
- Bessent linked recent inflation dynamics to higher oil and gas prices.