Treasury Secretary Scott Bessent expressed confidence in Federal Reserve Chair Kevin Warsh on Monday, saying both he and President Donald Trump have “great confidence” in the Fed chief despite Trump’s calls for lower interest rates.
Bessent Backs Warsh Despite Rate Hike
“I have great confidence in Chair Warsh,” Bessent told CNBC’s Squawk Box. “More importantly, the president has great confidence in him, and we are sure that he will do the right thing to balance the inflation mandate versus the growth mandate.”
The Federal Open Market Committee voted 12-0 on Sept. 16 to raise the federal funds target range to 3.75%-4%, its first increase since 2023. The Fed said inflation “remains elevated” and that tighter policy would support a faster return toward its 2% goal.
Warsh had spent weeks signaling concern about persistent price pressures, driving rate-hike expectations sharply higher after his Jackson Hole speech. After the vote, he said, “The plain fact is that inflation is too high, and has been for too long,” adding that summer inflation readings had not shown meaningful improvement.
Bessent Highlights Core And Headline Inflation Split
Bessent declined to say whether he supported the hike. He instead argued that “core inflation has been very quiescent” and said, “Everything is in the headline inflation.” He had previously made a similar argument as markets debated whether the Fed should look through an energy-driven supply shock.
August CPI data partly illustrate that split. Headline consumer prices rose 3.4% from a year earlier, while inflation excluding food and energy slowed to 2.4%. Energy prices jumped 16.3% year over year.
Trump criticized the Fed’s decision and continued calling for substantially lower rates, while administration adviser Peter Navarro separately attacked the hike as a mistake amid the energy shock.
Fed Signals Another Rate Hike Possible
The Fed may tighten again. Sixteen of 18 policymakers projected at least one additional increase this year, while the Fed’s median year-end policy-rate projection rose to 4.1%, according to UBS. The Fed meets again Oct. 27-28 and Dec. 8-9.
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