Bessent Backs Warsh Despite Rate Hike Concerns

Scott Bessent expressed confidence in Federal Reserve Chair Kevin Warsh following the recent rate hike. According to Bessent, both he and President Trump have great faith in Warsh's ability to balance inflation and growth.

The Fed raised the federal funds target range to 3.75%-4% on September 16, with a 12-0 vote. This was the first increase since 2023, citing persistent price pressures as a major concern. Warsh emphasized that 'inflation is too high, and has been for too long.'

Bessent highlighted the difference between core inflation, which has been stable, and headline inflation, which rose to 3.4% in August. He argued that everything is driven by headline inflation.

The Fed may tighten again, with 16 of 18 policymakers projecting at least one additional increase this year. The median year-end policy-rate projection rose to 4.1%, according to UBS. The next Fed meeting will be on October 27-28 and December 8-9.