US Treasury warns against rate hikes during US-Iran war energy ‘shock’

US Treasury Secretary Scott Bessent has called on the Federal Reserve not to hike interest rates because of an “energy supply shock” tied to the US-led conflict with Iran. “I think the Fed should understand that this is an energy supply shock,” while the underlying US economy is very strong, Bessent said in an interview on CNBC on Friday.

“So I think that to hike too much into an energy supply shock when it’s coming down, these are very noisy numbers,” he said. “The Fed’s supposed to look into the future, not look in the rearview mirror.” The central bank opted to maintain interest rates during its last policy meeting, leaving them at 3.75 to 4 percent.

CME FedWatch, which tracks the likelihood of monetary policy decisions, forecasts an 89.4 percent chance that rates will be raised to 4.00–4.25 percent at the next meeting, scheduled for December 9. Despite pressure from the White House to cut interest rates, the Federal Reserve has held them steady amid inflationary pressures stemming from the US-Israeli war on Iran .