Scott Bessent predicts core inflation will decline despite recent hot prints, citing easing energy supply shocks ahead of Kevin Warsh’s Fed tenure.
Treasury Secretary Scott Bessent expects a significant disinflation trend to emerge after one or two more elevated inflation reports. He attributed recent price surges to temporary energy supply shocks, which he believes will reverse as U.S. oil production ramps up. Bessent noted core inflation was already declining before the Iran conflict disrupted markets.
Recent data contradicts this outlook, with April consumer prices rising 0.6% and core prices up 0.4%. Annual inflation stands at 3.8%, while core inflation is at 2.8%. Wholesale prices surged 1.4% in April, pushing the 12-month rate to 6%, the highest since late 2022. Import and export prices also hit four-year highs.
Bessent’s comments come as Kevin Warsh prepares to take over as Federal Reserve chair, signaling potential shifts in monetary policy. The Treasury chief emphasized the transient nature of supply-driven inflation, suggesting the Fed may look past near-term volatility.