Wire flash
Treasury Secretary Bessent: AI and Deregulation Can Curb Inflation, Fed Should Keep Open Mind on Rates
Editorial responsibility
- No named human review is recorded for this page.
- Source reporting is collected, normalized, translated or condensed automatically when needed.
- Automatically published source-backed update
U.S. Treasury Secretary Scott Bessent stated that Federal Reserve policymakers should maintain an 'open mind' on interest rates, arguing that productivity gains from artificial intelligence (AI) and deregulation will help suppress inflation. Speaking on a program, Bessent claimed the U.S. economy is booming under President Trump, aided by tax cuts and deregulation, despite high fuel prices from conflict with Iran pressuring voters ahead of the November midterm elections. He praised Trump's Fed chair nominee Kevin Warsh, comparing the current economic growth to the 1990s internet boom under Alan Greenspan, who 'let the economy run.' Bessent noted that core inflation has been 'very steady' and declined in recent months, though government data showed August core CPI rose 0.3% month-over-month and 2.4% year-over-year. The remarks highlight a key debate for investors: if AI and deregulation boost economic capacity, the Fed may tolerate strong growth without aggressive rate hikes, potentially benefiting stocks and risk assets. However, persistently high energy prices from geopolitical conflicts could keep inflation elevated, pressuring bond yields and rate-sensitive sectors.
Source report
By Zhitong Finance
U.S. Treasury Secretary Scott Bessent has called on Federal Reserve policymakers to maintain an "open mind" on interest rates, arguing that productivity gains from artificial intelligence (AI) and deregulation will help contain inflation in the United States.
Bessent made the remarks while discussing the state of the U.S. economy. He stated that under President Donald Trump, the economy is thriving—thanks in part to tax cuts and deregulation—even as rising fuel prices linked to the conflict with Iran are putting pressure on American voters ahead of the November midterm elections.
Speaking on a program, Bessent said that Kevin Warsh, the Fed chair selected by Trump, is "very clear" that the U.S. economy is currently experiencing growth that is "comparable to, or even more significant than" the period when Alan Greenspan led the Federal Reserve during the 1990s internet boom.
Bessent noted that Greenspan at the time chose to "let the economy run," adding that "the Fed Board and the voting members of the Federal Reserve should keep an open mind, because this also involves the factor of deregulation."
For investors, Bessent's comments highlight the central debate over the interest rate outlook. If AI and deregulation are boosting the economy's productive capacity, the Fed may have more room to tolerate strong growth without responding with aggressive rate hikes. This could be positive for equities and other risk assets. However, persistently high energy prices could keep inflation elevated, pushing up U.S. Treasury yields and continuing to pressure interest-rate-sensitive sectors.
Inflation this year has been driven by record-high diesel and gasoline prices related to the war with Iran and Ukrainian attacks on Russia's energy industry—effects that have rippled through the U.S. economy and pushed up global bond yields.
According to government data released on September 11, the U.S. consumer price index excluding food and energy rose 0.3% month-over-month in August and 2.4% year-over-year. Days later, the Fed under Warsh raised its benchmark interest rate for the first time since 2023.
Despite this, Bessent argued that "core inflation has been very stable, and has actually declined over the past few months."
Source
智通财经Neutral / independent
Part of this Story
Bessent urges Fed to keep open mind on rates, citing AI and deregulation for inflation