Fed changes with Trump’s backing? "Full confidence"
U.S. Treasury Secretary Scott Bessent expressed confidence in the policy led by the new Fed Chair Kevin Warsh, who took office at the end of last month.
The official emphasized that Donald Trump has given the new Fed head the freedom to make decisions.
When asked whether he had spoken with the U.S. President about when a good time for a rate cut would come, Trump said he had "both publicly and privately declared full confidence in Warsh".
"He spoke decisively, addressing the issue of inflation," Bessent said in an interview with CNBC, adding that he is convinced Warsh will "take the best path" to fulfill the Fed’s mandates, namely price stability and maximum employment.
Importantly, the Treasury Secretary supported Warsh’s decision to stop publishing regular forecasts of the U.S. central bank, which had served as a guide to the Fed’s future policy direction.
This refers to the so‑called dot plot (English: Dot Plot), which the Fed uses to present its expectations for the future benchmark rate.
Bessent claims that the rise in consumer prices will slow as the U.S. conflict with Iran, which caused a sharp increase in energy costs, ends.
"Now that, I think, we have that conflict behind us, gasoline prices will fall again, and inflation will return to target levels," he said.
The PCE index published on Thursday rose to 4.1% year‑on‑year in May. That is more than twice the 2% target set by the Federal Reserve.
Source: Trading Economics.
The Federal Open Market Committee (FOMC), which Kevin Warsh chaired for the first time last week, decided to keep rates unchanged in the 3.5–3.75% range.
Higher inflation has increased expectations for rate hikes, which contradicts Donald Trump’s expectations.
Last year the Republican regularly attacked the Fed and its chair Jerome’a Powell for not cutting rates, ultimately leading to a legal dispute between the White House and the central bank.
Read more in the article: Rates may not fall? Prosecutors launch a major investigation into the central bank.
Source: Trading Economics.
Also read: Dollar’s long path to 4 PLN? Expert released forecasts for USD/PLN and EUR/USD. "The dollar could gain"
See also: Will the dollar surprise again? Expert released a forecast for USD/PLN and EUR/USD. "It’s hard for me to believe there will be no more fires"
Dollar and euro rates on Friday, June 26
The dollar to zloty rate on Friday, June 26 is at 3.76 PLN.
Chart. Dollar to zloty rate (USD/PLN)
Source: Trading Economics.
The euro to dollar rate reaches 1.13 USD.
Chart. Euro to dollar rate (EUR/USD)
Source: Trading Economics.
Also read: Dollar before a chance to break out? Expert: "Capital will flow back to USD"
See also: Dollar before a "nervous and dynamic" move, euro waiting for a drop? Expert released a forecast for USD/PLN and EUR/USD
Source: Bloomberg.
