US Treasury Secretary Scott Bessent has urged the Federal Reserve not to raise interest rates, pointing to what he called an “energy supply shock” tied to the US-led conflict with Iran. Speaking in a CNBC interview on Friday, he said the underlying US economy remains very strong.
The Fed kept rates unchanged at its last policy meeting, leaving them at 3.75 to 4 percent. According to CME FedWatch, which tracks the likelihood of monetary policy decisions, markets put an 89.4 percent chance on a rise to 4.00–4.25 percent at the next meeting, scheduled for December 9.
Bessent asks Fed to look ahead, not back
Bessent argued that the Fed should recognise the nature of the current energy shock. He said raising rates too far into a shock that is expected to ease would be a mistake, adding that the figures being produced were very noisy.
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“The Fed’s supposed to look into the future, not look in the rearview mirror,” he said. He also said he would not tell the Fed what to do, but that policymakers should keep an open mind. He noted that the Fed had made three rate cuts over the same period last year.
Bessent said a sharp reversal based only on an energy shock was not something he would do if he were on the Fed. “But I’m not on the Fed,” he added.
Fed officials weigh inflation pressures against White House demands
Despite pressure from the White House to cut rates, the Fed has held them steady amid inflation pressures linked to the US-Israeli war on Iran. Since the conflict began, the central bank has kept rates unchanged five times and raised them once.
Much of the pressure has come from energy prices, which had risen 20.4 percent year over year by September. The Labour Department was unable to collect data for October 2025 because of last year’s government shutdown, so it cannot provide a year-over-year comparison for October 2026, even though October’s energy price data has since been released.
Some senior Fed officials are pushing in the opposite direction. On Tuesday, Fed Governor Christopher Waller said he planned to back a quarter-point increase at the central bank’s December 8-9 meeting, unless the core consumer price index, one of the Fed’s key inflation measures, rose by 0.3 percent or more. In that case, he said at a conference in London, a 50-basis-point hike should be considered. The CPI report later showed a 0.4 percent monthly increase.
Jobs data and petrol prices add to the debate
Bessent’s remarks come as a stronger-than-expected jobs report strengthens the argument for higher rates. According to the Labour Department’s release last Friday, the US economy added 165,000 jobs in October.
Consumers are still feeling the strain at the petrol pump. The average price of a gallon of petrol is $3.87 ($1.02 per litre), down from $4.34 ($1.14 per litre) a month earlier. It remains well above the $2.98 ($0.79 per litre) recorded on February 28, when the US and Israel first struck Iran.
