Fed Urged to Hold Rates Steady Amid Iran Conflict, Treasury Secretary Bessent Advises 'Wait and See' Approach

WASHINGTON, April 13 – In an exclusive interview with Semafor, U.S. Treasury Secretary Scott Bessent urged the Federal Reserve to adopt a "wait and see" stance before considering any interest rate cuts, as the ongoing conflict in Iran injects significant uncertainty into the global economic outlook.

Speaking to Semafor Editor-in-Chief Ben Smith on Monday, Bessent pointed to robust economic performance in the first quarter, describing the U.S. economy as "very strong" in January and February. "The Fed is doing the right thing by sitting and watching how this situation unfolds," he stated, emphasizing the need for patience amid volatile conditions.

The Secretary's comments come as the war has roiled energy markets, sending global crude prices soaring over 30% and pushing the national average for retail gasoline above $4 per gallon for the first time in more than three years. This surge contributed to U.S. consumer prices rising at their fastest pace in nearly four years in March, according to recent data.

Bessent expressed confidence that the current price pressures would not become entrenched in long-term inflation expectations. He also drew a contrast with international counterparts, noting, "I would be shocked if the European Central Bank hiked rates now... Many European and Asian countries are subsidizing demand, an approach we haven't taken in the U.S."

When questioned on the long-term economic impact of the Iran conflict, Bessent offered a measured, albeit ambiguous, perspective: "I think we will look back and judge whether a period of intense conflict—be it 50, 100, or more days—was a price paid for decades of subsequent stability."

The economic turbulence and rising fuel costs are seen as a political headwind for the administration, with growing public discontent over economic management posing a challenge to President Donald Trump's approval ratings.

Reaction & Analysis

Michael Thorne, Chief Economist at Sterling Advisory: "Bessent's caution is prudent. The Fed's credibility hinges on not overreacting to transient supply shocks. The core economic indicators remain solid, but the geopolitical risk premium in oil markets is a wild card that needs time to settle."

Rebecca Shaw, Policy Analyst at the Economic Security Institute: "This 'wait and see' advice feels detached from Main Street. Working families are getting crushed at the pump and the grocery store right now. Delaying relief on rates while other nations act more aggressively risks leaving the U.S. economy behind and exacerbating inequality."

David Chen, Portfolio Manager at Horizon Capital: "The market has largely priced in a delayed Fed pivot. Bessent is confirming that narrative. The key takeaway is his confidence in inflation expectations remaining anchored—if that view holds, it gives the Fed the runway it needs to stay patient."

Anya Petrova, Former IMF Economist: "The subtext here is profound worry. Talking about 50 years of stability stemming from a war is an attempt to frame profound disruption as a potential long-term investment. It's a risky rhetorical gamble that underscores how unprepared policymakers were for this scale of escalation."