Bessent says it's "not necessarily" a mistake if the Fed raises interest rates again
CNBC
1h ago
Ai Focus
U.S. Treasury Secretary Yellen stated that if the Federal Reserve raises interest rates again in the future, it "may not necessarily" be considered a policy mistake. She also expressed her hope that the Fed would maintain an open attitude towards the "temporary" impact of energy prices and noted that the U.S. efforts to isolate Iran's economy have been "very successful."
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U.S. Treasury Secretary Scott Bosworth said on Wednesday that it "might not" be a mistake for the Federal Reserve to raise interest rates further in the future.

After Brian Sullivan in CNBC asked whether another interest rate hike in the future would constitute a monetary policy mistake, Bessent responded, "That's not necessarily the case."

Just hours before Bessent made the above remarks, the Federal Reserve announced that it would keep interest rates unchanged at its October meeting, a result that was in line with market expectations.

Bessent is an important advisor to U.S. President Donald Trump. Trump has called for interest rate cuts on multiple occasions and pressured Federal Reserve Chairman Jerome Powell on this issue during the last few months of his tenure. Powell's successor is Kevin Warsh.

However, Bessent stated on Wednesday that both he and Trump believe that Walsh performed well and was able to strike a balance between ensuring full employment and price stability.

"I think Chairman Walsh had a very good start," said Bessent, "I often say that I have great confidence in him."

The Federal Reserve's decision to remain inactive this time comes after it raised borrowing costs for the first time in three years a month ago. Traders of federal funds futures generally expect that the Fed will resume raising interest rates when it meets again in December.

Bessent stated that he hopes the Federal Reserve will maintain an "open mind" towards the supply shocks caused by energy prices and believes that these shocks are "temporary." The war between the United States and Iran has led to a significant decline in global crude oil production, which in turn has caused annual inflation rates to deviate further from the Federal Reserve's target of 2%.

Bessent also stated that the United States' efforts to isolate the Iranian economy, namely the "economic abandonment campaign" ( Operation Economic Outcast ), "are very successful." He said that internal estimates indicate that the Iranian economy could shrink by as much as 25% within a year.

When asked about the bond yields related to artificial intelligence debt, this senior Wall Street figure stated that they are "monitoring" it, but there is no need to worry about it.

Bessent specifically mentioned neoclouds. Such companies provide cloud infrastructure that supports artificial intelligence and have recently encountered difficulties in the market. Tesla CEO Elon Musk warned on Sunday that more than 200 neocloud companies "will face death and integration on a small-scale level."

“I don’t think that’s a problem at all,” said Bentente, “neoclouds is just a small part of the entire ecosystem, and we are still seeing financing taking place, as well as transactions being made.”

Bessent told CNBC that he expects the third-quarter GDP data to be “strong” when it is released on Thursday. However, he also added, “I haven’t seen the data yet.”

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