Bessent says rates should come down after the Iran conflict and voices 'great confidence' in Fed Chair Warsh after the hike

Treasury Secretary Scott Bessent told CNBC on September 21 that he could not say how long the Iran conflict will last, but that its end should ease rates. "Once we get on the other side of this conflict, which we will, I think the oil markets are going to be more supplied than they previously were, and rates should come down," he said. The comment was tied to oil supply and the link between crude prices and long-dated Treasury yields, not a forecast of Fed policy cuts. MarketScreener put the 10-year yield at 4.929% at the time, with WTI at $90.84 and Brent at $98.07.

The remarks came five days after the Federal Open Market Committee voted unanimously to raise its benchmark rate to a range of 3.75% to 4%, the first increase since 2023. Bessent said he has "great confidence in Chair Warsh" and that Warsh "will do the right thing to balance the inflation mandate versus the growth mandate". He declined to say whether he supported the hike itself, instead describing core inflation as "very quiescent." August data showed headline inflation at 3.4% and core at 2.4%, with energy prices up 16.3% from a year earlier.

Warsh has justified the hike by saying inflation "is too high and has been for too long," and 12 of 18 officials projected one more increase before year-end, with meetings in late October and early December. Bessent's framing, that an end to the conflict and lower oil would do the work of bringing rates down, sets up a contrast with a committee still leaning toward further tightening.

What to watch: oil prices and any progress in US-Iran talks, the October FOMC meeting, and whether the administration's public confidence in Warsh holds if the Fed hikes again.