(Bloomberg) — Treasury Secretary Scott Bessent said Federal Reserve policymakers should keep an “open mind” on interest rates, arguing that productivity gains from artificial intelligence and deregulation would help contain U.S. inflation.
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Bessent made his comment in the context of a U.S. economy that he said is thriving under President Donald Trump, thanks in part to tax cuts and deregulation, even as high fuel prices spurred by the conflict with Iran weigh on American voters ahead of midterm elections in November.
Fed Chairman Kevin Warsh, whom Trump picked to lead the Fed, is “well aware” that the U.S. economy is seeing similar “if not more substantial” gains than when Alan Greenspan was Fed chairman during the 1990s dot-com boom, Bessent said on Fox News Sunday Morning Futures.
Greenspan is “letting things flow” and “the Fed board and voters should have an open mind because, again, that’s the deregulation aspect,” Bessent said.
This year’s inflation has been fueled by record diesel and gasoline prices linked to the war in Iran and Ukrainian attacks on Russia’s energy industry, which has impacted the U.S. economy and sent bond yields soaring around the world.
Consumer prices in the United States excluding food and energy rose 0.3% in August and 2.4% on an annual basis, according to government data released on September 11. A few days later, the Fed, under Warsh, raised its benchmark rate for the first time since 2023.
Bessent argued that “underlying inflation has remained very calm and has actually declined over the past few months.”
Asked about China’s role in the Iran war, Bessent said he expects Iranian oil shipments to China to stop soon, adding to U.S. pressure on Iran to reach a deal on reopening the Strait of Hormuz.
“China has dramatically reduced all aid to Iran” and “there are only 15 million more barrels of Iranian oil on the water,” he said. “It is likely that within two weeks they will make their last oil delivery to China and then they will have nothing left.”
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