# Interest Rate Hikes Opposed by US Treasury Amid Iran War

- Link: https://the-timenews.com/interest-rate-hikes-treasury-iran/
- Published: 2026-11-13T16:31:07+00:00
- Author: The Time News

Higher borrowing costs could soon hit American households again, even as families
struggle with pump prices driven by military strikes in the Middle East. Treasury
Secretary Scott Bessent is pleading with the Federal Reserve to hold off on interest
rate hikes, arguing that temporary spikes in oil should not dictate long-term monetary
policy.

Speaking on CNBC, Bessent made clear that the central bank risks choking off growth
by reacting to volatile oil markets rather than fundamentals. The confrontation 
sets up an intense policy clash between the White House and central bankers ahead
of their final rate-setting session of the year.

**Also read:** [Federal Reserve Makes Interest Rate Decision Ahead of Midterms Amid Economic Pressure](https://the-timenews.com/federal-reserve-interest-rate-decision-ahead-of-midterms/)

If the central bank pushes borrowing costs higher in December, everyday loans from
credit cards to mortgages will become more expensive. That would squeeze consumers
who are already absorbing the fallout of the war with Iran.

## Bessent Warns Against Interest Rate Hikes

Bessent argued that the central bank must distinguish between temporary price shocks
and underlying economic strength. He pointed out that while energy costs spiked 
after military actions began, those figures are already showing signs of easing.

> “So I think that to hike too much into an energy supply shock when it’s coming
> down, these are very noisy numbers,” he said. “The Fed’s supposed to look into
> the future, not look in the rearview mirror.”

The Treasury secretary stressed that the broader domestic economy remains resilient.
Because of that underlying health, he contends policymakers should not overreact
to swings caused by overseas conflict.

“I’m not going to tell the Fed what to do,” Bessent added. “I am going to say they
should have an open mind.”

## The Standoff Over Inflation and Fuel Costs

Tensions between the White House and the central bank have simmered for months. 
The administration has repeatedly urged policymakers to cut borrowing costs, but
the Fed has held firm to contain inflation stoked by the US-Israeli war on Iran.

Since that conflict erupted, the Fed has maintained its benchmark rate five times
and raised it once. The key lending rate currently sits in a target range of **3.75
to 4 percent**.

Energy markets explain much of the central bank’s hesitation. By September, energy
costs had jumped 20.4 percent compared to the previous year. Measuring the exact
pace of price increases has grown complicated because the Labour Department could
not gather data during the October 2025 government shutdown, leaving economists 
without an official year-over-year baseline for October 2026.

Drivers still feel the pinch whenever they fill their tanks. Here is how current
fuel costs compare to earlier points in the conflict:

 * $2.98 per gallon on February 28, when initial strikes hit Iran
 * $4.34 per gallon recorded one month ago
 * $3.87 per gallon at pumps today

While fuel has retreated from its peak, drivers still pay nearly a dollar more per
gallon than when the war began.

## Diverging Paths Inside the Central Bank

Bessent also noted a sharp policy reversal from last year, when officials delivered
three rate cuts over the same calendar stretch. He cautioned that pivoting toward
aggressive interest rate hikes now would ignore that recent trajectory.

“And now to reverse just based on an energy supply shock, a reversal in a dramatic
way isn’t something that I would do if I were on the Fed,” Bessent said. “But I’m
not on the Fed.”

Inside the Fed, influential policymakers are leaning the other way. Federal Reserve
Governor Christopher Waller signalled during a London conference that he favours
tighter policy after fresh economic reports showed stubborn price pressures.

Speaking at an event hosted by King’s Business School and the Money Macro and Finance
Society, Waller set a clear line. He said he would support a quarter-point hike 
at the upcoming December meeting unless core consumer price index data came in below
0.3 percent.

Waller warned that if core inflation exceeded that threshold, a larger move of **
50 basis points** should be on the table. The Labour Department’s inflation report
subsequently landed at a 0.4 percent monthly increase, blowing past his target.

## Jobs Data Complicates the December Decision

A resilient labour market is giving inflation hawks extra ammunition. Employers 
added 165,000 jobs in October, surpassing Wall Street expectations and showing that
businesses are still hiring despite higher borrowing costs.

Strong hiring usually encourages policymakers to keep rates elevated to prevent 
wages and prices from spiralling. Markets have responded by pricing in an imminent
policy tightening.

According to the CME FedWatch tracker, investors assign an 89.4 percent probability
that officials will lift rates into the 4.00 to 4.25 percent range next month. That
expectation puts the central bank on a direct collision course with the Treasury.

Fed officials gather in Washington for their next policy vote on December 8 and 
9, when they will decide whether to pull the trigger on higher borrowing costs.

_Source: [Al Jazeera](https://www.aljazeera.com/economy/2026/11/13/us-treasury-warns-against-rate-hikes-during-us-iran-war-energy-shock)_

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