Bessent: inflation under control, Fed made “Gigantic” mistake on rates in 2022

U.S. Treasury Secretary Scott Bessent has sharply criticized the Federal Reserve’s 2022 rate hike strategy, calling it a “gigantic mistake” that pushed yields well above their long-term averages. In an interview with Bloomberg TV, Bessent argued that the government missed the optimal window to issue long-term debt during 2021–2022, and warned against locking in high borrowing costs today.

We’re more than a standard deviation above long-run rates. Why issue long-duration debt now?” he said, pointing to a structural misalignment in the Treasury’s debt management strategy. On current market conditions, Bessent struck a dovish tone, stating that inflation is “very, very contained” and that further declines in Treasury yields remain possible, depending on macro developments.

Leadership Change at the Fed?

Asked about speculation surrounding a potential leadership change at the Federal Reserve, Bessent avoided confirming any plans but noted, “I’ll do whatever the President wants.” He added that he is fully engaged in his current role, while confirming that discussions about Fed succession are ongoing in Washington and a candidate to replace Jerome Powell could be named in the coming weeks.

Fiscal Deal and Trade Push Ahead of July Deadlines

Bessent also expressed optimism that the administration’s tax and spending package will pass Congress before the July 4 holiday. He forecast a “flurry of trade agreements” in the final days leading up to the July 9 deadline, signaling a busy summer for U.S. economic diplomacy.