Treasury Secretary Scott Bessent has publicly endorsed incoming Federal Reserve Chair Kevin Warsh’s expected approach to interest rates, signaling a potentially dovish shift for the central bank.
Speaking on May 14, Bessent predicted “substantial disinflation” ahead and expressed confidence that Warsh will “do the right thing” if he decides to cut rates.
The endorsement comes one day after the Senate confirmed Warsh on May 13, with strong Republican support. He will succeed Jerome Powell as Fed Chair, inheriting an economy still under pressure from inflation tied to geopolitical tensions, including those surrounding Iran.
Bessent described Warsh as a “great candidate” who will ensure accountability in Fed policymaking. In April, the Treasury chief had advised the Fed to adopt a “wait and see” approach on inflation, particularly given how the Iran conflict was distorting price signals.
The key nuance in Bessent’s statement is the word “if.” He said Warsh will do the right thing “if he cuts rates,” leaving enough ambiguity to avoid direct accusations of dictating monetary policy.
Warsh served as a Fed governor from 2006 to 2011, navigating the institution through the financial crisis. He has historically been described as more hawkish than dovish, making Bessent’s confidence in potential rate cuts all the more noteworthy.