Washington is feeling the heat these days. Outside my window, the air is thick with that heavy, humid pre-storm smell, but inside the Treasury, things are a different kind of heavy. Scott Bessent, the US Treasury Secretary, made it clear on April 14 that he’s betting on core inflation to keep sliding downward. Even with the Iran war rattling markets and gas prices jumping, he’s sticking to his guns: the Federal Reserve needs to cut rates. Eventually.
It’s a bit of a delicate dance. Bessent seems to get why central bankers might want to hold off for a second to see where the dust settles regarding the conflict. “Wait and see” is the phrase floating around. Actually, he was quite specific about it—the economy was looking strong in January and February, so watching the situation play out isn’t necessarily a bad strategy for the Fed. But don’t let that fool you into thinking the push for lower rates has vanished. “No, no, no,” he insisted when asked if the stance had shifted. They still need those cuts, even if the timing is now a bit of a moving target.
Then there’s the whole Kevin Warsh situation. The administration really wants him in the chair, and they want it fast. May 15 is the looming deadline when Jerome Powell’s term hits the wall. If the Senate doesn’t move on Warsh by then, things get messy, though Powell has suggested he’d stick around temporarily—or at least, he has that governor slot through 2028 if he really wants to hang on. It’s all very bureaucratic, yet feels urgent in a way that suggests people are starting to get restless behind those closed doors.
Meanwhile, the gas price situation is hard to ignore. We’re talking over $4 a gallon, a level we haven’t seen in years, thanks to that 50 percent spike in crude oil. It’s definitely putting a dent in the mood across the country, affecting approval ratings, and honestly, the math for everyday shoppers is getting brutal. But Bessent is looking past the headline numbers. He’s focused on core prices, which exclude the volatile food and energy sectors, and claims those are actually heading in the right direction.
There’s some backroom drama with Senator Thom Tillis, too. He’s playing hardball, blocking Fed nominations until a Justice Department investigation into Powell is sorted out. A real headache.
Bessent claims there’s a deal in the works to get Warsh’s hearing moving by next week, but whether that actually happens—well, people in this town say a lot of things. We’ll see if the math holds up once the conflict finally cools down and prices hopefully drop.