Bessent Expects Inflation Pressures to Ease Despite Recent Surge
U.S. Treasury Secretary Scott Bessent said on Thursday that he expects inflation pressures to cool in the coming months despite a series of stronger-than-expected economic reports.
Speaking to CNBC during President Donald Trump’s summit with Chinese President Xi Jinping, Bessent acknowledged that recent inflation readings have been broadly negative but argued that the surge is largely linked to temporary energy-related supply shocks.
He predicted the economy could still experience one or two additional “hot inflation numbers” before inflation begins slowing more substantially.
Energy Prices Blamed for Inflation Spike
Bessent said the recent rise in inflation has been heavily driven by higher energy prices following disruptions caused by the Iran war.
According to the Treasury secretary, the United States plans to continue increasing oil production in an effort to offset supply shortages and stabilize energy markets.
“I firmly believe that nothing is more transient than a supply shock,” Bessent said during the interview.
He added that inflation trends had already been improving before the conflict involving Iran began disrupting global oil markets.
“Before the Iranian conflict began, core inflation was coming down,” Bessent explained. “So I think core inflation will continue coming down.”
US Inflation Data Comes in Hotter Than Expected
Recent economic data has intensified concerns that inflation could remain elevated longer than previously expected.
Consumer prices increased 0.6% in April, while core inflation, which excludes food and energy prices, rose 0.4% during the month.
On an annual basis, headline inflation climbed to 3.8%, while core inflation stood at 2.8%.
At the same time, wholesale inflation also accelerated sharply.
Producer prices jumped 1.4% in April, pushing annual producer inflation to 6%, the highest level since late 2022.
Import and export prices also recorded their strongest increases in nearly four years, reflecting broader price pressures across the global economy.
Kevin Warsh Set to Lead Federal Reserve
Bessent’s comments came shortly before Kevin Warsh officially takes over leadership of the Federal Reserve following Senate confirmation earlier this week.
Warsh is set to replace outgoing Fed Chair Jerome Powell, whose term ends Friday.
The leadership transition comes at a critical moment for the central bank as policymakers attempt to balance persistent inflation pressures with concerns about economic growth and interest rate policy.
Bessent Rejects “Transitory” Inflation Comparisons
Bessent also distanced himself from the controversial “transitory inflation” narrative that dominated economic discussions during the COVID-19 pandemic.
“I was never on team transitory during Covid,” he said.
However, he maintained confidence that the current inflation shock tied to energy prices would eventually ease once oil markets stabilize.
“We’ll get to the other side of this,” Bessent said, adding that energy inflation could decline again within days or weeks depending on developments in global oil markets.
