Bessent Backs Warsh Amid Rate Hike Controversy

Scott Bessent expressed confidence in Federal Reserve Chair Kevin Warsh's ability to balance inflation and growth following the central bank's decision to raise interest rates. In an interview with CNBC, Bessent stated that he has 'great confidence' in Warsh, who was a key proponent of the rate hike.

Warsh had signaled concern about persistent price pressures ahead of the Federal Open Market Committee (FOMC) meeting, which led to heightened expectations for a rate increase. After the vote, Warsh emphasized that inflation remains 'too high' and that tighter policy would support a faster return to the Fed's 2% goal.

Bessent argued that core inflation has been subdued, while headline inflation has been driven by energy prices, which rose 16.3% year over year in August. The FOMC voted 12-0 to raise the federal funds target range to 3.75%-4%, its first increase since 2023.

The rate hike was criticized by President Trump, who continued to call for lower rates. Administration adviser Peter Navarro also attacked the decision as a mistake amidst the energy shock. The Fed's median year-end policy-rate projection rose to 4.1% following the meeting.