Scott Bessent Says Kevin Warsh Is 'Well Aware' of AI Productivity Gains: Fed Should Keep an 'Open Mind' on Interest Rates

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Treasury Secretary Scott Bessent said Sunday that the Federal Reserve, under chair Kevin Warsh , should keep "an open mind" as growth accelerates, citing artificial intelligence-driven productivity and the administration's deregulation push as reasons inflation can remain contained.

Speaking with Larry Kudlow on Fox News' Sunday Morning Futures, Bessent said that during former Fed chair Alan Greenspan's era, the Fed "let things run" because of productivity gains tied to the internet, while today's gains are "probably the same kind of gains, if not more substantial now."

He said the Fed "should have an open mind because… we have created supply with deregulation."

The Treasury Secretary argued that deregulation has expanded supply fast enough to absorb a private-sector demand shock, unlike the regulatory constriction he blamed for inflation under former President Joe Biden .

Bessent added that Warsh, President Donald Trump 's choice for Fed chair, was "well aware" of the productivity gains.

"Core inflation has been very quiescent," Bessent said, adding that it has dropped in recent months, blaming elevated headline inflation on oil prices driven up by the war in Iran.

In August, headline consumer price inflation rose 3.4% year over year, while core inflation slowed to 2.4%, and energy prices jumped 16.3%.

Bessent predicted oil would fall once the conflict was resolved, pulling headline inflation back toward core.

Earlier this month, Trump said oil prices will fall "precipitously" once the U.S. wins its war with Iran, predicting gas will first drop to $3 a gallon before ultimately falling below $2.

The Federal Reserve raised its benchmark interest rate by 25 basis points to a range of 3.75%-4.00%, marking the first rate hike since 2023.

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