U.S. Treasury Secretary: "Fed Should Keep an Open Mind on Interest Rates... AI-Driven Productivity Is Curbing Inflation"

[Financial News] Scott Bessent, the U.S. Treasury secretary, argued that "AI-driven productivity gains and deregulation can curb inflation," adding, "The Federal Reserve System (Fed) should keep an open mind about the path of interest rates."
On the 27th (local time), Secretary Bessent appeared on Fox News, a pro-Trump-leaning U.S. broadcaster, and said, "The U.S. economy is experiencing productivity gains similar to or greater than those seen during the internet boom of the 1990s."
Secretary Bessent referred to how Alan Greenspan, who was Fed chair at the time, tolerated strong economic growth in light of productivity gains. "Greenspan allowed the economy to keep growing," he said. "The Federal Reserve Board and FOMC voting members should also remain open-minded and consider the effects of deregulation and productivity gains."
Bessent made the remarks as inflationary pressures intensified after energy prices surged amid the war with Iran, prompting the Fed to raise interest rates. The Fed raised its policy rate by 0.25 percentage point on the 16th and has also signaled one additional rate hike later this year.
Against this backdrop, Secretary Bessent said, "The Atlanta Fed GDPNow model points to a growth rate of more than 5% this quarter," arguing, "This is not growth that is generating inflation." He added, "Core inflation has been very subdued and has actually declined over the past few months," and said, "The energy shock is not spilling over into core inflation."
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