The Treasury secretary emphasized during a CNBC interview that the underlying economy remains solid and cautioned policymakers against overreacting to volatile metrics. However, robust economic data, including a 165,000-job gain in October and a 0.4 percent monthly rise in core inflation, continue to bolster the case for further monetary tightening. Markets now heavily anticipate an interest rate hike at the central bank's upcoming December gathering despite the administration's concerns.
Key points
Treasury officials maintain that energy price spikes linked to the Iran conflict represen…: Treasury officials maintain that energy price spikes linked to the Iran conflict represent a temporary shock rather than systemic economic weakness.
Federal Reserve officials have expressed openness to hiking borrowing costs by up to 50 b…: Federal Reserve officials have expressed openness to hiking borrowing costs by up to 50 basis points to counter stubborn core inflation.
Market pricing indicates the Federal Reserve is broadly expected to disregard administrat…: Market pricing indicates the Federal Reserve is broadly expected to disregard administration pressure and proceed with tighter monetary policy.
Sources checked by our analysis pipeline: 1
Despite Treasury’s Scott Bessent’s remarks, financial tracker CME Fed Watch forecasts rate hike in December likely.
US Treasury Secretary Scott Bessent has called on the Federal Reserve not to hike interest rates because of an “energy supply shock” tied to the US-led conflict with Iran.
“I think the Fed should understand that this is an energy supply shock,” while the underlying US economy is very strong, Bessent said in an interview on CNBC on Friday.
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“So I think that to hike too much into an energy supply shock when it’s coming down, these are very noisy numbers,” he said. “The Fed’s supposed to look into the future, not look in the rearview mirror.”
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