US Treasury Chief Predicts Oil Price Drop, Slower Inflation as Hostilities End

Scott Bessent, U.S. Secretary of the Treasury, expressed his confidence in Kevin Warsh, the new Chair of the U.S. Federal Reserve (Fed), predicting that inflation will slow as a result of the end of hostilities with Iran. According to Bloomberg and other outlets on June 23 (local time), Secretary Bessent stated at the Economic Club of New York, "I am confident that the Fed Chair will find the optimal path for both price stability and economic growth," expressing his views accordingly. When asked whether the new Fed Chair would face pressure from U.S. President Donald Trump to lower interest rates, Bessent stressed that President Trump had promised to ensure Warsh's independence at his inauguration. "President Trump also understands that the bond market has brought down more governments than any weapon," Bessent said. "Therefore, I believe the President has full confidence that the Fed Chair will make the right decisions." Chair Warsh, during his first Federal Open Market Committee (FOMC) meeting after taking office this month, decided to keep the benchmark interest rate unchanged. This decision stands in contrast to President Trump's previous strong demands for former Chair Jerome Powell to lower rates. Secretary Bessent predicted that, as the United States and Iran have signed a memorandum of understanding (MOU) to end hostilities and are proceeding with follow-up negotiations, the upward trend in prices will also slow. "I believe we are now on the other side of this conflict," he said. "Gasoline prices will come down again, and inflation will return to target levels." Regarding the 60-day waiver on Iranian crude oil sales, he described it as "a measure that will benefit the global market" and explained that "it is part of the negotiation process." Bessent also explained that a strong dollar policy and the revival of U.S. manufacturing are not contradictory policy goals, stating, "When people talk about a strong dollar, I don't think they mean the Bloomberg Dollar Index." This suggests that the exchange rate itself is not a policy objective, but rather that the fundamentals of the U.S. economy and manufacturing competitiveness are what matter. He went on to mention that the value of the dollar has declined since early last year, saying, "I don't wake up in the morning thinking, 'The dollar went down, so that's good for the economy.' I just think it's another price on the screen." Regarding artificial intelligence (AI), Secretary Bessent said he is one of the key officials responsible for U.S. AI policy as well as the overall manager of economic relations with China, emphasizing, "The greatest risk of AI is that China might overtake us." He added, "The reason China wants to discuss AI is because we are ahead," and stressed, "Therefore, we must continue to stay ahead." Without targeting specific countries, he warned, "The United States will respond to any attempts to weaponize supply chains, steal technology, evade sanctions, manipulate markets, or coerce our partner nations." On June 22, China announced sanctions by placing 10 U.S. defense companies on its dual-use export control list and banning the government procurement of products from 46 U.S. companies. Bessent stated that the United States must maintain leadership in areas such as AI, quantum computing, shipbuilding, and critical minerals, and noted that the Trump administration is pushing to build supply chains that can operate even during pandemics or wars.