Treasury secretary backs wait-and-see approach, potentially drawing Trump's ire
Treasury Secretary Scott Bessent offered a measured view on US monetary policy, indicating that the Federal Reserve has room to hold interest rates steady while officials assess the economic fallout from the war involving Iran, even as the administration continues to favor lower borrowing costs over the longer term.
The remarks point to a more cautious near-term posture from the administration on rates, despite President Donald Trump’s repeated calls for the Fed to ease policy. Trump has argued for more than a year that high borrowing costs are restraining economic activity, but Bessent’s latest comments suggest the White House may be willing to tolerate a wait-and-see approach as geopolitical risks cloud the outlook.
“The impetus here is they will need to cut rates,” Bessent said during a roundtable with reporters after speaking at the Institute of International Finance. At the same time, he stressed that policymakers may need more visibility before acting. He said he was “highly confident” that inflation pressures outside the more volatile food and energy components would continue to cool. “If they want to wait for some clarity, I understand that,” he added.
That stance also appears to reflect the transition underway at the central bank. Rather than pushing for an immediate move under current Fed Chair Jerome Powell, whose term ends in mid-May, Bessent indicated that the administration would prefer Trump’s nominee, Kevin Warsh, to shape the next phase of rate policy.
“We should wait for the new chairman, Warsh, and let him lead the next cycle,” Bessent said.
Trump has already said he expects Warsh to cut rates. The nomination advanced a step this week after the Office of Government Ethics released Warsh’s financial disclosures, showing he is worth at least $131 million. The Senate Banking Committee is aiming to hold a hearing on his nomination next Tuesday.
Still, Warsh’s path to confirmation is not without obstacles. Senator Thom Tillis of North Carolina, a senior Republican on the committee, has said he will not support moving the nomination forward until a Justice Department investigation into the Fed’s headquarters renovation project is completed. Tillis, like Powell, has raised concerns that the probe could be used to pressure the central bank into reducing rates. A federal judge has also blocked Justice Department subpoenas tied to the matter.
Bessent declined to weigh in directly on whether the administration would object if Powell were to remain temporarily in an acting capacity should Warsh’s confirmation be delayed, saying only that he would “let this play out.” He added, “We want Kevin Warsh in as soon as possible.”
Beyond rates, Bessent also pointed to energy prices as a key uncertainty tied to the conflict in Iran. He declined to say how long gasoline prices might remain elevated, describing the situation as “all path dependent.” Still, he expressed confidence that the pressure would eventually ease once hostilities subside. “The conflict will end, prices will come down, and then headline inflation will come down,” he said.
