U.S. Treasury Secretary Scott Bessent said the United States will experience substantial disinflation after one or two [1] more hot inflation numbers.
This projection suggests that the current spike in consumer prices is a temporary phenomenon rather than a long-term economic trend. If the Treasury Secretary's outlook holds, it could signal a shift in how the administration manages fiscal policy and coordinates with the Federal Reserve to stabilize the economy.
Speaking Thursday on CNBC's morning program “Squawk Box,” Bessent said the current volatility in price indices is largely fed by energy costs, which he believes will reverse. This reversal, he said, will lead to a quick easing of price pressures across the broader economy.
"One or two more hot inflation numbers, and then I think we're going to see substantial disinflation," Bessent said [2].
The Secretary's confidence in a downward trend reflects a belief that current inflationary drivers are not systemic. He said the current price movements are fleeting, stating, "Nothing is more transient" [3].
Bessent's comments come at a time when markets are closely watching the timing of inflation peaks to determine future interest rate trajectories. By predicting a swift transition to disinflation, the Treasury Secretary is signaling that the peak of the current inflationary cycle is nearly reached. He said he expects a significant cooling effect on prices in the near term, stating, "I think we're going to see substantial disinflation" [4].
“"I think we're going to see substantial disinflation."”
Bessent's focus on energy as the primary driver of current inflation suggests the Treasury believes the problem is supply-side and temporary rather than a result of permanent demand-pull inflation. By framing the current 'hot' numbers as a brief precursor to disinflation, he is managing market expectations to prevent panic-driven interest rate hikes or drastic fiscal contractions.
