Treasury Secretary Scott Bessent: US should ‘wait and see’ before lowering interest rates
In a 23-minute interview at the Semafor World Economy’s inaugural Treasury Secretary Dinner at the Library of Congress, Bessent weighed in on a range of other subjects, including:
A forthcoming executive order requiring banks to collect citizenship information on their customers: “It’s in process. And I don’t think it’s unreasonable, because: Why don’t we have information on who’s in our banking system? I have a place in the UK; they want to know who lives in every apartment — and how do we know that it’s not part of a foreign terrorist organization?”
On Kevin Warsh’s pending nomination to the Fed: “My criteria is who has an open mind. … With the Fed, you expect a monetary policy board, but you never think there’s this sprawling organization up there. … He’s going to do a serious look at how the reserve banks interact. I think the reserve banks [are] a management disaster, because something like 50% of the people in each reserve bank do not report to the president.”
On Sen. Thom Tillis, R-N.C., opposing Warsh’s nomination over the Trump administration’s investigation into Fed Chair Jerome Powell: “We’ll have to see what Senator Tillis needs to do.”
On potential insider trading in prediction markets: “I spoke to the head of the CFTC the other day” and “didn’t notice anything unusual. … I would use them more as a tool. … People always forget in markets what’s priced in and what’s unexpected. So I think the good thing about prediction markets is it tells you where the consensus is.”
On concerns over AI making banks vulnerable to cyberattacks: Bessent called reports of a recent meeting with bank CEOs over Anthropic’s Mythos “dramatized,” adding: “The CEOs happened to be in town, so it was much more convenient just to bring them in and just talk about the cybersecurity of what’s happening with these large language models and to get their thoughts on the way forward.”
On whether Treasury would work with Anthropic on those concerns: “Of course. They have a very specific issue with DOW. So to the extent that they are widely used in the market, we would.”
On fears the war in Iran could weaken the US dollar: “Well, as you’ve seen during the war, the dollar is strengthened. So I’m not worried about that.”
On whether the US underestimated China’s rare-earths leverage: “I actually think they miscalculated, because … three times in five years, they have proved that they’re not a reliable supplier.” He pointed to Covid, rare earths; and most recently, energy products: “It’s not a great business.”
On whether Trump should entertain allowing Chinese automakers to build US factories ahead of an upcoming visit to Beijing: “I think what we’re thinking of is two boards: a Board of Trade and maybe a Board of Investment. I’m not sure. … I think there are these things that I would think maybe the auto industry would supply. I have a house out of the country … and a lot of my neighbors have their small SUVs, and I will tell you it is the best $75,000 car that $35,000 can buy. It is clearly highly subsidized.”
