Treasury Secretary Bessent Says Warsh Faces No Pressure to Cut Rates as Inflation Runs Hot

Treasury Secretary Scott Bessent said Friday that new Federal Reserve Chair Kevin Warsh is under no political pressure to cut interest rates, emphasizing the central bank’s independence. Speaking at the Reagan National Economic Forum in California, Bessent stated he “100%” agreed with President Trump’s desire for Warsh to be autonomous. Bessent, who met with Warsh this week, forecast that the new chair will eliminate forward guidance and focus on “accountability” and “credibility.” He noted that bond yields peaked on May 22, the day before Warsh was sworn in. “I’m not saying whether it’s causation or correlation, but rates peaked the day before Chair Warsh was sworn in,” Bessent said. The comments come as inflation data underscores Warsh’s challenges. Consumer prices rose nearly 4% in April from a year earlier, while wholesale prices surged 6%, driven by energy costs. The bond market is pricing in a rate hike, with the 2-year Treasury yield 25 basis points above the Fed’s benchmark rate range. Traders see a 36% chance of a December rate increase.