{"id":438883,"date":"2026-09-28T04:36:07","date_gmt":"2026-09-27T21:36:07","guid":{"rendered":"https:\/\/www.swingfish.trade\/blog\/market-news\/bessent-urges-fed-to-keep-an-open-mind-on-rates-citing-ai-productivity-438883\/"},"modified":"2026-09-28T04:36:07","modified_gmt":"2026-09-27T21:36:07","slug":"bessent-urges-fed-to-keep-an-open-mind-on-rates-citing-ai-productivity","status":"publish","type":"post","link":"https:\/\/www.swingfish.trade\/blog\/market-news\/bessent-urges-fed-to-keep-an-open-mind-on-rates-citing-ai-productivity-438883\/","title":{"rendered":"Bessent urges Fed to keep an open mind on rates, citing AI productivity"},"content":{"rendered":"<div>\n<p dir=\"ltr\">Bessent&#8217;s comments are best read as the Treasury Secretary&#8217;s own advocacy for a looser Fed reaction function rather than a signal of imminent policy change, but the framing matters for rate expectations given his direct line to a Fed chair the administration itself selected. Explicitly invoking the Greenspan late-1990s precedent, where the Fed tolerated stronger growth on productivity grounds, suggests the administration wants markets to expect the Fed to look through near-term inflation prints if AI-driven productivity gains can be credited for offsetting them. That framing runs alongside a genuine near-term inflation complication: Iran-war-linked fuel costs remain elevated and are already showing up in core CPI and bond yields, and Bessent&#8217;s own comments acknowledge those costs are weighing on voters. His remarks on Iranian oil deliveries to China potentially ending within two weeks are also relevant for oil markets, since a further tightening of Iran&#8217;s remaining export outlets would reinforce upside price risk at exactly the same time the broader Hormuz standoff remains unresolved.<\/p>\n<p dir=\"ltr\">\nBessent wants the Fed to treat today&#8217;s AI boom like Greenspan treated the 1990s internet boom, waving through faster growth even as Iran-linked fuel costs keep showing up in the inflation data.<\/p>\n<p dir=\"ltr\">Summary:<\/p>\n<ul dir=\"ltr\">\n<li><a href=\"https:\/\/www.bloomberg.com\/news\/articles\/2026-09-27\/bessent-urges-fed-to-keep-open-mind-on-us-inflation-outlook\" rel=\"follow\">Bloomberg <\/a>(gated) reports Treasury Secretary Scott Bessent said Federal Reserve policymakers should keep an &#8220;open mind&#8221; on interest rates, citing productivity gains from artificial intelligence and deregulation as forces that will help keep US inflation contained.<\/li>\n<li>Speaking on Fox News, Bessent said the US economy is thriving under President Trump, helped by tax cuts and deregulation, even as elevated fuel prices tied to the Iran conflict weigh on voters ahead of November&#8217;s midterm elections.<\/li>\n<li>Bessent said Fed Chairman Kevin Warsh, appointed by Trump, is well aware the US economy is seeing gains similar to, or more substantial than, those during Alan Greenspan&#8217;s tenure through the 1990s internet boom, when Greenspan &#8220;let things run.&#8221;<\/li>\n<li>US core consumer prices rose 0.3% in August and 2.4% annually, according to data released on 11 September; days later, the Fed under Warsh raised its benchmark rate for the first time since 2023.<\/li>\n<li>Bessent said core inflation has been &#8220;quiescent&#8221; and has actually eased over the past few months.<\/li>\n<li>Asked about China&#8217;s role in the Iran conflict, Bessent said China has substantially reduced assistance to Iran and expects Iran&#8217;s remaining oil deliveries to China, roughly 15 million barrels still at sea, to be completed within about two weeks.<\/li>\n<\/ul>\n<p dir=\"ltr\">\nTreasury Secretary Scott Bessent has urged Federal Reserve policymakers to keep an &#8220;open mind&#8221; on interest rates, arguing that productivity gains from artificial intelligence and deregulation will help keep US inflation under control even as fuel costs tied to the Iran conflict weigh on households, according to Bloomberg.<\/p>\n<p dir=\"ltr\">Speaking on Fox News&#8217; Sunday Morning Futures, Bessent framed the US economy as thriving under President Trump, crediting tax cuts and deregulation for the strength even as elevated diesel and gasoline prices, driven by the war with Iran and Ukrainian attacks on Russian energy infrastructure, weigh on voters heading into November&#8217;s midterm elections. He said Fed Chairman Kevin Warsh, who Trump picked to lead the central bank, is well aware that current economic gains are comparable to, or potentially more substantial than, those seen when Alan Greenspan chaired the Fed during the 1990s internet boom. Greenspan, in Bessent&#8217;s telling, &#8220;let things run,&#8221; and he argued the Fed&#8217;s board and voting members should adopt a similarly open-minded stance given the deregulatory backdrop.<\/p>\n<p dir=\"ltr\">The comments land against a live inflation debate. Diesel and gasoline prices, elevated for much of this year because of the Iran war and Ukrainian strikes on Russia&#8217;s energy sector, have pushed up bond yields globally and fed directly into US price data. Core consumer prices, which exclude food and energy, rose 0.3% in August and climbed 2.4% on an annual basis, according to government data released on 11 September. Days after that release, the Fed under Warsh raised its benchmark interest rate for the first time since 2023. Bessent, however, characterised underlying inflation trends more favourably, saying core inflation has been &#8220;quiescent&#8221; and has actually declined over the past several months, a framing that supports his broader case for the Fed to tolerate faster growth.<\/p>\n<p dir=\"ltr\">Bessent was also asked about China&#8217;s role in the Iran conflict, and said Beijing has substantially reduced any assistance to Tehran. He estimated only around 15 million barrels of Iranian oil remain on the water bound for China, and said he expects Iran to make its final delivery to Chinese buyers within roughly two weeks, after which China would have no further access to Iranian crude. That dynamic, Bessent suggested, adds to the pressure already building on Iran to reach a deal on reopening the Strait of Hormuz, tying the administration&#8217;s domestic economic messaging directly to its broader strategy in the Iran standoff.<\/p>\n<p dir=\"ltr\">\n<p>                            This article was written by Eamonn Sheridan at investinglive.com.<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"<p>Bessent&#8217;s comments are best read as the Treasury Secretary&#8217;s own advocacy for a looser Fed reaction function rather than a signal of imminent policy change, but the framing matters for rate expectations&hellip;<\/p>\n","protected":false},"author":216,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[86],"tags":[],"class_list":["post-438883","post","type-post","status-publish","format-standard","hentry","category-market-news"],"_links":{"self":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/posts\/438883","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/users\/216"}],"replies":[{"embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/comments?post=438883"}],"version-history":[{"count":0,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/posts\/438883\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/media?parent=438883"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/categories?post=438883"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/tags?post=438883"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}