US Treasury chief urges Fed to avoid rate hike over Iran war energy shock
US Treasury Secretary Scott Bessent said the Federal Reserve should not hike interest rates due to an energy supply shock linked to the Iran war, citing a strong underlying US economy. He urged the central bank to look ahead rather than react to volatile data.
US Treasury Secretary Scott Bessent said on Friday that the Federal Reserve should keep an open mind and avoid raising interest rates because of an "energy supply shock" tied to the Iran war.
"I think the Fed should understand that this is an energy supply shock," while the underlying US economy is very strong, Bessent said in an interview on CNBC.
"So I think that to hike too much into an energy supply shock when it's coming down, these are very noisy numbers," he said. "You know, the Fed's supposed to look into the future, not look in the rearview mirror."
A stronger-than-expected US jobs report last week bolstered the case for further Federal Reserve interest rate hikes, which had lost some momentum amid a post-election stock market selloff and growing fears that weaker AI-driven demand could undercut the economy.
The US central bank left its policy rate on hold last month, with Fed Chairman Kevin Warsh saying policymakers would be watching for data to help decide whether more monetary policy tightening would be needed.
"I'm not going to tell the Fed what to do. I am going to say they should have an open mind," Bessent said.
The Fed did three rate cuts over the same period last year, he noted. "And now to reverse just based on an energy supply shock, a reversal in a dramatic way isn't something that I would do if I were on the Fed. But I'm not on the Fed."