Treasury Secretary Scott Bessent has placed his confidence firmly behind Federal Reserve Chair Kevin Warsh, calling him an “incredible choice” and pointing to a professional relationship spanning nearly two decades. Warsh was confirmed by the Senate in May 2026, succeeding Jerome Powell. The two now maintain regular communication, including scheduled breakfast meetings to align policy views.
Bessent’s endorsement is tied to his thesis that current U.S. inflation is a temporary supply shock driven by the Iran conflict. He argued publicly that once the conflict ends, energy prices will fall and headline inflation will decline. By early June 2026, Bessent testified that the Iran conflict had been halted, setting the stage for what he terms “substantial disinflation” after a few more elevated readings.
If his forecast holds, the Fed could face less pressure to keep rates high, opening the door for easing. Such a shift would likely support risk assets, including cryptocurrencies. However, Bessent’s outlook carries risks: energy prices may not retreat as expected, or other factors like tariffs and consumer demand could keep inflation stubbornly high.