Treasury Secretary Bessent now says it’s OK for the Fed to wait to lower rates amid oil surge

U.S. Treasury Secretary Bessent said the Fed may wait to cut interest rates amid the rise in oil, a departure from its previous stance on monetary policy.

Bessent said, “Do I think interest rates should be reduced? Eventually. I think we have to wait and see.” said Semaphore Editor-in-Chief Ben Smith at the Semaphore World Economy conference in Washington, DC.

Bessent has previously said Fed Chairman Jerome Powell should accelerate lowering interest rates, saying in January that rate cuts “are the only missing ingredient for stronger economic growth.” Therefore, the Fed should not delay.

But the change in thinking comes amid an ongoing war in Iran that has pushed oil prices above $100 a barrel.

This complicates the Fed’s mandate, which considers rising inflation as well as slowing growth. The Central Bank was last expected to keep interest rates constant this year, and the possibility of the lowest increase was in this direction. Fed funds futures pricing.

“The economy was very strong in January and February,” Bessent told Semafor.

Powell’s term as chairman expires in May, but he may need to stay in office longer if Trump’s presidential candidate, Kevin Warsh, whom Bessent helped elect, cannot be confirmed by the Senate by then. Sen. Thom Tillis has vowed to block a vote on Warsh until U.S. Attorney General Jeanine Pirro ends the Fed’s criminal investigation of Powell regarding building cost overruns. Powell said the investigation was designed by the Trump administration to pressure him not to cut interest rates further.

See the full semaphore story Here.

— CNBC’s Jeff Cox contributed to this report.