U.S. Treasury Secretary Scott Bessent said President Donald Trump has confidence in Federal Reserve Chair Kevin Warsh, while arguing that U.S. interest rates should decline once the Iran conflict ends. Bessent also said the administration is watching the energy sector for signs of a potential supply shock.
Bessent backs Warsh as Iran conflict weighs on rates
Bessent said he and Trump have confidence in Warsh and that the Fed chair will make the appropriate decisions to fulfil the Federal Reserve’s mandate. He also said Trump has full confidence in Warsh regarding the central bank’s interest-rate policy.
According to Bessent, core inflation has not risen and the indicators being monitored remain unchanged. He said authorities will continue watching the energy sector to determine whether the Iran conflict creates a supply shock.
Bessent said the relationship between bond and energy markets is unusually strong. He added that interest rates should fall after the Iran conflict ends.
Treasury points to liquidity shortage and repo operations
Bessent said financial markets are experiencing insufficient liquidity, prompting an increase in the size of repo operations. He said Treasury yields are deviating from equilibrium and noted that the 30-year Treasury yield has not risen materially since the expansion of repo operations.
He also said he could not determine how long the Iran conflict would continue. Bessent said the United States is taking steps to block parties that provide support to Iran.
From September 23, Bessent said Iranian airlines will be barred from operating worldwide. The Treasury Department has separately announced sanctions targeting Iran’s aviation sector and entities supporting it.
Bessent highlights AI defence and China talks
Bessent said the United States needs to maintain a leading edge in artificial intelligence defence and resilience. He also said AI laboratories should be held accountable.
Separately, Chinese Vice Premier He Lifeng met Bessent and U.S. Trade Representative Jamieson Greer in New York on September 20. The discussions focused on implementing earlier economic and trade commitments, promoting bilateral trade and investment, and addressing artificial intelligence-related issues. The U.S. Trade Representative’s office confirmed that Greer was scheduled to join Bessent for the New York meeting.
Q1. What did Bessent say about Trump and Fed Chair Kevin Warsh?
Bessent said he and President Trump have confidence in Kevin Warsh and that Warsh will make the right decisions to fulfil the Federal Reserve’s mandate.
Q2. When does Bessent expect interest rates to fall?
Bessent said interest rates should fall once the Iran conflict ends.
Q3. What did Bessent say about U.S. market liquidity?
Bessent said markets are experiencing insufficient liquidity, leading to larger repo operations.
Q4. What will happen to Iranian airlines from September 23?
Bessent said Iranian airlines will be barred from operating worldwide from September 23.
Q5. When did Bessent meet China‘s Vice Premier He Lifeng?
Bessent met He Lifeng in New York on September 20, alongside U.S. Trade Representative Jamieson Greer, for discussions on economic and trade commitments, bilateral investment and AI-related issues.
Source: U.S. Department of the Treasury
