Fed Rate Hike Seen on December 8-9, Treasury Secretary Warns Against It

US Treasury Secretary Scott Bessent warned the Federal Reserve on Friday against raising interest rates to counter an energy supply shock driven by the war with Iran.

“The Fed's supposed to look into the future, not look in the rearview mirror,” US Treasury Secretary Scott Bessent said, arguing that policymakers should look ahead rather than react to volatile, backward-looking indicators while the broader American economy remains strong. His remarks on CNBC directly countered mounting market expectations for monetary tightening ahead of the central bank’s December policy meeting.

“I think the Fed should understand that this is an energy supply shock,” Bessent said in an interview on CNBC, noting that core inflation remains under control.

The central bank held its benchmark interest rate steady between 3.75 and 4 percent at its previous meeting. However, CME FedWatch data calculates an 89.4 percent probability that rates will climb to 4.00–4.25 percent during the Federal Open Market Committee meeting scheduled for December 8-9.

The push for higher rates gained momentum following a stronger-than-expected jobs report released on November 6 by the Labour Department, which showed the US economy added 165,000 jobs in October. That strong hiring print complicated the policy outlook just as markets were digesting post-election equity volatility.

Federal Reserve Governor Christopher Waller signaled support for a quarter-point rate increase at the upcoming meeting unless the core consumer price index came in below 0.3 percent. The subsequent CPI release showed a 0.4 percent monthly increase.

“In that case, I believe a 50-basis-point hike in the policy rate should be considered at the December meeting,” Waller said at a conference in London hosted by King’s Business School and the Money Macro and Finance Society.

Energy prices climbed 20.4 percent year over year by September. The Labour Department could not provide a year-over-year comparison for October 2026 because data collection was disrupted during the government shutdown in October 2025.

Consumers continue facing elevated fuel costs, though averages have retreated from recent peaks. The average price for a gallon of petrol stands at $3.87, down from $4.34 a month prior, but significantly higher than the $2.98 recorded on February 28 when the US and Israel first struck Iran.

Treasury officials remain optimistic that falling domestic gasoline prices will yield a benign inflation reading next week, helping insulate growth from Middle Eastern supply disruptions. Washington continues to monitor naval security in the Strait of Hormuz to stabilize oil flows.

“To hike too much into an energy supply shock when it’s coming down, these are very noisy numbers,” Bessent said.