U.S. Treasury says Fed should avoid rate hikes over Iran war energy shock
With markets reassessing the path of U.S. monetary policy, Treasury Secretary Scott Bessent says the Federal Reserve should not react too aggressively to energy-driven inflation tied to the Iran war. He argues the shock is temporary and noisy, even as a stronger-than-expected jobs report revives expectations for further rate increases.
Highlights
- Bessent advises the Fed to avoid rate hikes in response to the Iran-driven energy supply shock while the U.S. economy remains strong.
- Investors reassess Fed tightening prospects after last week's robust U.S. jobs report, despite earlier concerns from a post-election stock market selloff and weaker AI-driven demand.
- The Fed left its policy rate unchanged last month, with Chair Kevin Warsh emphasizing data-dependent decisions for potential future tightening.
Policy stance amid energy-driven inflation
As reported by Reuters, Bessent says the Fed should keep an open mind and avoid raising rates in response to what he describes as an energy supply shock, while the underlying U.S. economy remains very strong.In an interview on CNBC, he says hiking too much into an energy supply shock, especially when it is easing, would amount to reacting to volatile short-term data. He adds that the central bank is supposed to look ahead rather than rely on backward-looking indicators.
Bessent also says he is not trying to direct the Fed, but believes policymakers should stay flexible. He notes the Fed carried out three rate cuts over the same period last year, and says a sharp reversal based only on an energy shock is not an approach he would support.
Market implications for the Fed outlook
The comments come as investors weigh whether the Fed will need to tighten policy further after a stronger-than-expected U.S. jobs report last week strengthened the case for additional rate hikes.Those expectations had previously lost momentum amid a post-election stock market selloff and rising concerns that weaker AI-driven demand could undermine economic growth. The Fed left its policy rate unchanged last month, and Chair Kevin Warsh says policymakers are watching incoming data to determine whether further tightening is necessary.
Latest Fed News
-
Afghanistan
-
Albania
-
Algeria
-
Angola
-
Argentina
-
Armenia
-
Australia
-
Austria
-
Azerbaijan
-
Bahamas
-
Bahrain
-
Bangladesh
-
Belarus
-
Belgium
-
Bolivia
-
Botswana
-
Brazil
-
Brunei
-
Bulgaria
-
Cambodia
-
Cameroon
-
Canada
-
Chile
-
China
-
Colombia
-
Congo
-
Costa Rica
-
Cote d'Ivoire
-
Croatia
-
Cuba
-
Cyprus
-
Czechia
-
DR Congo
-
Denmark
-
Dominican Republic
-
Ecuador
-
Egypt
-
El Salvador
-
Estonia
-
Eswatini
-
Ethiopia
-
Finland
-
France
-
Georgia
-
Germany
-
Ghana
-
Greece
-
Haiti
-
Hong Kong
-
Hungary
-
India
-
Indonesia
-
Iran, Islamic republic
-
Iraq
-
Ireland
-
Israel
-
Italy
-
Jamaica
-
Japan
-
Jordan
-
Kazakhstan
-
Kenya
-
Korea
-
Kuwait
-
Kyrgyzstan
-
Laos
-
Latvia
-
Lebanon
-
Lesotho
-
Libya
-
Lithuania
-
Luxembourg
-
Madagascar
-
Malaysia
-
Malta
-
Mauritius
-
Mexico
-
Moldova
-
Mongolia
-
Montenegro
-
Morocco
-
Mozambique
-
Myanmar
-
Namibia
-
Nepal
-
Netherlands
-
New Zealand
-
Nigeria
-
North Macedonia
-
Norway
-
Oman
-
Pakistan
-
Palestine
-
Panama
-
Papua New Guinea
-
Paraguay
-
Peru
-
Philippines
-
Poland
-
Portugal
-
Puerto Rico
-
Qatar
-
Reunion
-
Romania
-
Rwanda
-
Saudi Arabia
-
Serbia
-
Singapore
-
Slovakia
-
Slovenia
-
Somalia
-
South Africa
-
Spain
-
Sri Lanka
-
Sweden
-
Switzerland
-
Syria
-
Taiwan
-
Tajikistan
-
Tanzania
-
Thailand
-
Trinidad and Tobago
-
Tunisia
-
Turkey
-
UAE
-
Uganda
-
Ukraine
-
United Kingdom
-
United States
-
Uruguay
-
Uzbekistan
-
Venezuela
-
Vietnam
-
Yemen
-
Zambia
-
Zimbabwe
- Forex
- Crypto
