US Treasury Secretary Bessent urges Fed to remain open-minded on rates

US Treasury Secretary Scott Bessent has urged the Federal Reserve to maintain an ‘open-minded’ approach to interest rate decisions. Speaking on Fox News, Bessent suggested that the central bank should not follow a purely mechanical process, noting that AI-driven productivity gains and deregulation could help manage inflation without requiring aggressive economic cooling.

Bessent highlighted that core inflation has remained relatively stable, with August core consumer prices rising 0.3% month-over-month. He referenced former Fed Chair Alan Greenspan’s era to argue for allowing economic growth to persist. This stance contrasts with recent Fed actions; following a 0.25 percentage point rate hike to a range of 3.75% to 4% in mid-September, many Fed officials indicated that inflation remains too high and may require further hikes through the end of the year.

Separately, investor Howard Marks of Oaktree Capital Management expressed a preference for less activist communication from the Federal Reserve. Marks argued that excessive signaling can create market dependency and systemic risks if the Fed fails to follow through on its stated intentions. He also noted a prevailing market optimism driven by artificial intelligence, suggesting investors should remain cautious and consider defensive assets.