- Treasury Secretary Bessent urges Fed to keep an open mind on interest rates amid AI gains
- He credits tax cuts and deregulation for strengthening the US economy under Trump
- Inflation driven by high fuel prices linked to Iran conflict and Russian energy attacks
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 will help keep US inflation in check.
Bessent framed his comment in the context of a US economy that he said is thriving under President Donald Trump due partly to tax cuts and deregulation, even as elevated fuel prices spurred by the conflict with Iran weigh on US voters ahead of midterm elections in November.
Fed Chairman Kevin Warsh, whom Trump picked to lead the Fed, is “well aware” that the US economy is seeing gains similar to “if not more substantial” than when Alan Greenspan was Fed chair during the 1990s internet boom, Bessent said on Fox News' Sunday Morning Futures.
Greenspan “let things run,” and “the board and the voters on the Fed should have an open mind because, again, it's the deregulatory aspect,” Bessent said.
Inflation this year has been driven by record-high diesel and gasoline prices linked to the Iran war and Ukrainian attacks on Russia's energy industry, sending ripples through the US economy and pushing up bond yields worldwide.
US consumer prices excluding food and energy climbed 0.3% in August and advanced 2.4% on an annual basis, according to government data released Sept. 11. Days later, the Fed under Warsh raised its benchmark rate for the first time since 2023.
Bessent argued that “core inflation has been very quiescent, and is has actually dropped over the past few months.”
Asked about China's role surrounding the Iran war, Bessent said he expects Iranian oil deliveries to China to stop soon, adding to US pressure on Iran to make a deal on reopening the Strait of Hormuz.
“China has substantially reduced any assistance to Iran” and “there's only 15 million more barrels of Iranian oil on the water,” he said. “Probably within the next two weeks they're going to make their final delivery of oil to China and then they will have nothing.”
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