Bessant Urges Fed to Hold Off on Rate Hikes Amid Inflation Concerns

U.S. Treasury Secretary Scott Bessant is urging the Federal Reserve to refrain from raising interest rates, citing improving productivity due to artificial intelligence and deregulation as a way to curb inflation.

In an interview on Fox News, Bessant argued that if the Fed were to raise rates in October, just before the midterm elections, it could stimulate public sentiment and impact prices and interest rates.

He also pointed out that the Federal Reserve Bank of Atlanta's GDP now model predicts growth of more than 5% this quarter, which is not inflation-causing growth. Additionally, Bessant stated that core inflation has fallen over the past few months, and energy shocks are not shifting to core inflation.

The market predicts a 68.1% chance of an increase in FOMC in October and a 94% chance in December. The U.S. government bond market has been soaring due to the spread of inflation and the possibility of further interest rate hikes, with the 30-year Treasury bond rate exceeding 5.5% on September 26th.