Treasury Secretary Scott Bessent told CNBC that additional rate hikes could be justified, despite the Fed’s recent pause and President Trump’s call for lower rates.

In an interview with CNBC on Wednesday, Treasury Secretary Scott Bessent cautioned that future Federal Reserve interest‑rate hikes would not automatically constitute a policy error. His remarks came hours after the Fed announced it would leave rates unchanged at its October meeting, a decision that matched market expectations.

Fed’s latest stance and market outlook

The central bank’s pause follows a rate increase in September – the first hike in three years – and precedes a December meeting where many fed‑funds futures traders anticipate a return to tightening. Bessent, a close adviser to President Donald Trump, said both he and the president have confidence in Chair Kevin Warsh’s ability to balance full employment with price stability.

• "I think Chair Warsh is off to a great start," Bessent said
• "As I often say, I have great confidence in him"
• He praised Warsh’s openness to data on energy‑price shocks

Energy shock and geopolitical backdrop

Bessent highlighted the “transitory” nature of the current energy‑price shock, noting that the war in Iran has sharply cut global crude output and pushed annual inflation farther from the Fed’s 2% target. He also pointed to the U.S. “Operation Economic Outcast,” which he described as “very successful,” and warned that Iran’s economy could shrink up to 25% between March 2025 and March 2026.

What traders are watching

Market participants will monitor the Fed’s December policy meeting for any shift in tone, especially around the supply‑side energy narrative Bessent raised. Key data points include upcoming U.S. inflation reports and any further developments in the Iran conflict that could affect crude supplies and price dynamics.

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This article is compiled from international market news for information only. It is not investment advice.