US Treasury warns against rate hikes during US-Iran war energy ‘shock’

What the report says

US Treasury Secretary Scott Bessent urged the Federal Reserve to avoid raising interest rates too aggressively, arguing that the US economy is facing an energy supply shock linked to the US-led war with Iran, Al Jazeera reported on 13 November 2026. Speaking in a CNBC interview, Bessent said policymakers should look ahead rather than respond too strongly to what he described as noisy short-term data. He also said he was not directing the Fed, but wanted it to keep an open mind.

The article noted that the Fed left its benchmark rate unchanged at 3.75 percent to 4 percent at its most recent meeting, while market tracker CME FedWatch was still assigning a high likelihood of a quarter-point increase at the December 8-9 meeting. That expectation appeared stronger after a solid US jobs report showing 165,000 new positions in October. Al Jazeera also reported that Fed Governor Christopher Waller had signaled support for a rate hike, and even a larger move, if inflation data remained elevated.

According to the report, energy prices have been a key source of pressure since the conflict began, with petrol prices still above levels seen before the war. The piece said the Fed has kept rates steady several times and raised them once since the conflict started, illustrating the tension between inflation concerns and the economic effects of higher energy costs.