Treasury Secretary Scott Bessent cites “Team Transitory” in inflation remarks to Semafor.
US Should Wait to Cut
In an on-stage interview with Semafor, Bessent said US should ‘wait and see’ before lowering interest rates
The Federal Reserve should “wait and see” before deciding whether to lower interest rates amid the war in Iran, US Treasury Secretary Scott Bessent said Monday at Semafor World Economy in Washington, DC.
“Do I think rates should be lowered? Eventually. I think now that we have to wait and see,” Bessent told Semafor Editor-in-Chief Ben Smith. “But I think as we went into January [and] came out of January and February — the economy was very strong.”
Bessent said he’s confident recent price increases won’t permanently alter how consumers view the economy. The US government said Friday that inflation rose three times faster in March than it did in February amid surging oil and gas costs. Inflation excluding food and energy, however, rose slightly less than forecasters had anticipated.
“If ever there was ‘Team Transitory,’ it’s this,” Bessent said. “I don’t believe this is going to get embedded into inflation expectations.”
Asked whether the war in Iran would wind up being good or bad for the US economy, Bessent said: “I think we will look back and say — I don’t know the number of days, whether it’s 50 or 100 or more — for 50 years of stability.”
Bessent also said he thought in February that the economy would have grown more than 4% this year. Asked whether he still thought that, he said: “Obviously, we’re going to have some make-up to do.” “In theory [yes], even though we have a big catch-up,” Bessent added.
Reflections on “Wait and See”
Trump will not be pleased with Bessent’s “wait and see” idea.
Expect clarification soon. Obviously, Bessent did not say what he said.
Meanwhile, with Trump making economic mistake after mistake, what needs a “wait and see” is the “Team Transitory” idea.
Reflections on Expectations
Consumers expectations are 4.8 percent inflation a year from now.
Expectations are 3.4 percent five years from now.
Do those expectations fit Bessent’s statement “I don’t believe this is going to get embedded into inflation expectations.”
I think we need new definitions of embedded and transitory.
Don’t worry. New definitions and explanations are surely coming.
I have a suggestion. Scott, please give former Fed Chair Janet Yellen a call. She can help.
ZeroHedge and I have related ideas.
Don’t Worry It’s Transitory
Q: Transitory to What?
A: That’s what you should be worried about. Either higher inflation, or a recession, or both.
Meanwhile, let’s wait for further clarity. I expect quite a bit more clarity in the coming months one way or another.
I remain open to the idea that a recession will dampen demand so much that the rate of inflation does decline.
Then we will be discussing Bessent’s strong economy idea.
“Obviously, we’re going to have some make-up to do.” “In theory [yes], even though we have a big catch-up.”
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Inflation Expectations Percent
One Year Ahead: 4.8 percent
One Year Ahead 3-Month Moving Average: 4.0 percent
Five Year Ahead: 3.4 percent
Five Year Ahead 3-Month Moving Average: 3.3 percent
The Fed’s target is 2.0 percent.
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