Treasury Secretary Scott Bessent said Wednesday that another Federal Reserve interest-rate increase would not necessarily represent a policy mistake, even as the central bank paused after its first hike in three years. Asked whether a future increase would qualify as an error, Bessent replied that it would “not necessarily” be so. The decision followed a quarter-point increase in September.
In its statement, the committee said economic activity was expanding at a strong pace while inflation remained elevated. It said that collecting more information would help officials determine the policy stance needed to return inflation to the Fed’s 2% goal.
Investors had broadly expected the October pause, while market pricing continued to point to a meaningful possibility of a December hike. The September increase came after inflation data showed renewed price pressure, with energy costs adding to the challenge of bringing inflation down. Bessent said he wanted the Fed to remain open to the possibility that energy-related supply pressures could prove temporary.
Bessent also said officials were monitoring higher yields on debt tied to artificial-intelligence infrastructure but did not view the market’s problems with so-called neocloud companies as a broad financial threat. He said those firms represent a small part of the overall technology ecosystem and that financing and deals were still being completed. He separately said he expected the next third-quarter economic-growth reading to be strong, while acknowledging that he had not yet seen the data.