Treasury Secretary Bessent now says it’s OK for the Fed to wait to lower rates amid oil surge

U.S. Treasury Secretary Bessent said the Federal Reserve could wait to lower interest rates amid the oil spike, in a departure from his previous stance on monetary policy.

“Do I think rates should be lowered? Eventually. I think now that we have to wait and see,” Bessent told Semafor Editor-in-Chief Ben Smith at the Semafor World Economy conference in Washington, DC.

Bessent has previously said that Fed Chair Jerome Powell should hasten cutting interest rates, saying in January that reductions are “the only ingredient missing for even stronger economic growth. Which is why the Fed should not delay.”

But the change in thinking comes amid the ongoing war in Iran, which has driven up oil prices to above $100 a barrel.

That complicates the Fed’s mandate, as it eyes rising inflation alongside slowing growth. The central bank was last expected to hold rates steady this year, with the slimmest possibility of a hike, according to fed funds futures pricing.

Coming out of “January and February — the economy was very strong,” Bessent told Semafor.

Powell’s term as chair is up in May, but he could have to stay on longer if Trump’s chair nominee which Bessent helped select, Kevin Warsh, can’t get confirmed by the Senate by the time. Sen. Thom Tillis has vowed to block a Warsh vote until U.S. Attorney Jeanine Pirro ends her criminal probe into Powell related to Fed building cost overruns. Powell has said the probe is designed to put pressure on him by the Trump administration for not cutting rates more.

See the full Semafor story here.

— CNBC’s Jeff Cox contributed to this report.