US Treasury warns against rate hikes during US-Iran war energy ‘shock’

US Treasury Secretary Scott Bessent has urged the Federal Reserve not to raise interest rates in response to higher energy costs linked to the US-led conflict with Iran. He described the rise as a temporary supply shock and said the Fed should focus on where the economy is heading, while acknowledging it should make its own decision.

The Fed has kept rates at 3.75 to 4 per cent, though market forecasts put the chance of a rise to 4 to 4.25 per cent at its December meeting at 89.4 per cent. US energy prices were up 20.4 per cent year on year in September, and the economy added 165,000 jobs in October. Fed Governor Christopher Waller has backed a quarter-point rise, with a half-point increase to be considered after monthly core inflation reached 0.4 per cent; petrol averaged $3.87 a gallon, down from $4.34 a month earlier but above $2.98 on 28 February.