US Treasury Secretary Scott Bessent stated on October 28 (local time) during a CNBC interview that additional Federal Reserve interest rate hikes would "not necessarily" constitute a policy error. The remarks came hours after the Fed announced a rate hold at its October Federal Open Market Committee (FOMC) meeting, with markets widely expecting a rate increase at the December meeting. Bessent requested Fed flexibility on energy-driven inflation currently exceeding the 2% target, attributing supply shocks to the US-Iran war's impact on global oil production.
Bessent Expresses Confidence in Fed Chair Warsh's Dual Mandate Balance
Bessent emphasized that both he and President Donald Trump maintain strong confidence in Fed Chair Kevin Warsh. He assessed that Warsh is successfully balancing the dual mandate of full employment and price stability. "I think Chair Warsh is off to a very good start," Bessent told CNBC.
The Treasury Secretary, a key Trump administration figure, made these comments despite the president's consistent calls for lower interest rates. Bessent requested the Fed maintain an "open mind" regarding energy price increases, characterizing supply shocks from rising energy costs as having a "temporary nature."
Treasury Estimates Iran Economy May Contract Up to 25% Under Sanctions
Bessent described the US "Operation Economic Outcast" measures to isolate Iran's economy as highly successful in implementation. According to internal Treasury estimates, Iran's economy could contract by up to 25% within one year. The sanctions campaign aims to economically isolate Iran following the war's impact on global oil production.
Bessent Dismisses AI Cloud Debt as Non-Systemic Risk
Addressing recent financial market concerns about artificial intelligence-related debt and bond yields, Bessent drew a clear line. He did not view potential bankruptcies or consolidation among emerging AI cloud companies as a systemic risk despite public concerns.
"We are monitoring it," Bessent stated, "but I don't think it's a problem at all." He explained that "NeoCloud is just a small component of the entire ecosystem, and I believe funding is still taking place."
Treasury Secretary Expects Strong Q3 GDP Without Reviewing Data
Regarding the upcoming third-quarter US GDP release, Bessent stated he had not yet directly reviewed the data but "expected it to be strong." The Treasury Secretary provided no specific figures or detailed analysis to support this assessment.
FAQ
What did Scott Bessent say about Fed rate hikes on October 28?
Scott Bessent stated during an October 28 CNBC interview that additional Federal Reserve rate hikes would "not necessarily" be a policy error. He made these remarks hours after the Fed announced a rate hold at its October FOMC meeting.
Why did Bessent request Fed flexibility on inflation?
Bessent requested the Fed maintain an "open mind" because energy price increases from the US-Iran war have pushed annual inflation above the Fed's 2% target. He characterized these supply shocks as having a "temporary nature."
How much could Iran's economy contract under US sanctions according to Treasury estimates?
Bessent stated that internal Treasury estimates indicate Iran's economy could contract by up to 25% within one year under the "Operation Economic Outcast" sanctions measures.
