Bessent expects 'substantial disinflation' as Warsh takes over the Fed

Treasury Secretary Scott Bessent told reporters he sees "substantial disinflation" arriving in the months ahead, as Kevin Warsh formally takes the helm of the Federal Reserve. Warsh was confirmed by the narrowest Senate margin in recent memory, after a divisive nomination fight that raised questions about the central bank's independence.

Bond markets reacted before Warsh's first official meeting. Yields on longer-dated US Treasuries climbed as investors recalibrated rate expectations under the new chair. Strategists noted that the move resembled a "market-driven tightening" without the Fed lifting policy rates itself, and that volatility is likely to remain elevated.

Bessent argued that lower energy prices in coming months and softer wage growth would carry inflation back toward the Fed's two-percent target. Warsh has indicated he wants a more rules-based approach to monetary policy. His first public remarks as chair are expected next week and will be closely watched.