Amid rising energy prices driven by the war with Iran and renewed inflationary pressures, Bessent publicly reiterated twice within two days that he understands the Federal Reserve's position of waiting for more data before taking action.
Bessent told CNBC on Wednesday: &#34;If they need to delay an interest rate cut, I understand.&#34; The day before, he also told the media at a roundtable discussion, &#34;If they want to wait for some clearer signals, I understand.&#34;
This contrasts sharply with Bessent's public stance over the past year. Prior to this, he had repeatedly stated that current conditions supported the Fed lowering borrowing costs. This shift brings the Treasury Department's position closer to the cautious camp within the Fed.
Bessent added that once energy costs fall, the Fed will then be &#34;able to take more action&#34; to advance an interest rate cut. This phrasing suggests he views the delay in an interest rate cut as temporary rather than a fundamental change in policy direction.
<h2>The War with Iran and Inflation Data Provide Grounds for Holding Steady</h2>
The direct background for Bessent's shift in stance is the surge in energy prices triggered by the war with Iran.
U.S. March CPI data released last week showed the largest month-over-month increase in overall inflation since 2022. Although core CPI has not sent clear alarm signals, another major monthly price indicator, PCE, has recently continued to show price pressure, further supporting the argument for maintaining a patient monetary policy.
Bessent also pointed out on Wednesday that it may take some time for gasoline prices to fall. This means that even if oil prices have retreated from recent highs, they remain far above February levels, limiting their short-term suppressive effect on inflation.
<h2>Wash Takes Over Soon; First Vote Faces Political Sensitivity</h2>
Bessent's remarks also coincide closely with the timing of the Federal Reserve's leadership transition. If Wash completes the confirmation process before the June Fed policy meeting, he will face a difficult situation: whether most members of the Federal Open Market Committee (FOMC) are ready to support restarting an interest rate cut remains uncertain.
If the FOMC majority is not yet prepared to support an interest rate cut, Wash will face a dilemma: either align with Trump's long-standing demand for an interest rate cut and push for it only to be overridden by a majority vote, or choose to hold steady? The former would be a rare scenario in decades where a Fed chair is voted down.
Historically, Paul Volcker was voted down in 1986, when he had already led the Fed for nearly seven years and his dissenting view was against cutting rates. For Wash, being voted down in his first vote upon assuming office would raise questions about his influence within the institution right from the start of his term.
Bessent told the media on Tuesday that Wash could &#34;lead the next cycle of the Fed.&#34; This wording was interpreted by outsiders as indicating that the Trump administration might give Wash some leeway to wait until data conditions mature before pushing the FOMC to reach a consensus on an interest rate cut. However, Bessent did not elaborate explicitly on this point.
Wash himself will have the opportunity to clarify his own stance on potential interest rate cut timelines at the Senate Banking Committee confirmation hearing on April 21.
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CRAK

Bessent voiced his support for the Federal Reserve to hold steady under the current economic conditions and expressed understanding of the decision to delay an interest rate cut on two consecutive days. This shift in stance is linked to rising energy prices and inflationary pressures caused by the war with Iran. Although gasoline prices have fallen, they remain above February levels, limiting their short-term impact on inflation. Bessent stated that once energy costs decline, the Fed will be able to take further action to advance an interest rate cut. Meanwhile, the leadership transition at the Fed adds uncertainty to interest rate cut decisions

- Bessent has acknowledged the Federal Reserve's decision to wait for more data before acting, linking this stance to rising energy prices resulting from the Iran conflict.  
- He noted that while inflation pressures are significant, particularly in light of recent CPI figures, a delay in cutting interest rates is viewed as temporary rather than a fundamental shift in policy.  
- The upcoming confirmation of Walsh as a Fed leader adds political complexity, as uncertainty remains over whether the Federal Open Market Committee will support any potential rate cuts during his first vote.

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Attitude Reversal! Bessent Speaks Out for Two Consecutive Days, Supporting the Fed to Hold Steady as War Clouds Dim Interest Rate Cut Expectations