Treasury Secretary Scott Bessent expressed optimism about easing inflation pressures, predicting a decline just as the new Federal Reserve chair, Kevin Warsh, takes office. In a CNBC interview, Bessent attributed the recent spike in inflation to energy supply shocks exacerbated by the Iran conflict but believes these pressures will subside as U.S. oil production ramps up. He noted that core inflation was already on a downward trend before the conflict began.

Despite recent data showing a 0.6% increase in consumer prices for April and a 12-month inflation rate of 3.8%, Bessent anticipates that the current inflationary environment will not persist. He expects one or two more high inflation readings before a significant disinflation phase begins, contrasting this situation with the previous inflation surge post-COVID, which was driven by unprecedented fiscal and monetary stimulus.

Market professionals should watch for potential shifts in monetary policy under Warsh’s leadership, as a reduction in inflation could influence interest rate decisions and overall market sentiment.

Source: cnbc.com