Bessent: Inflation is expected to return to 2% in 2026, and there may be "narrowing" space in tariff policies

U.S. Treasury Secretary Becerra recently sent clear signals regarding the outlook for the U.S. economy and monetary policy direction, he expects the U.S. inflation rate to return to the target level of 2% by 2026 and hinted that there may be room for adjustments in current tariff policies. These statements provide key guidance for the market to understand the economic agenda of the Trump administration's second term.

In an interview with CNBC, Becerra pointed out that inflationary pressures are gradually easing as supply chain bottlenecks are alleviated and energy costs decline. He emphasized that the Treasury will work closely with the Federal Reserve to ensure price stability and does not rule out the possibility of further suppressing imported inflation by optimizing the tariff structure. Although he did not disclose specific details, he mentioned that tariff exemptions for certain allies or specific goods could be one of the policy options in the future, which the market interprets as a potential "narrowing" of the impact of tariff policies.

Meanwhile, the political maneuvering surrounding the nomination of the Federal Reserve Chair continues. Becerra made it clear that despite the current Federal Reserve Chair Powell facing a criminal investigation, the Senate should proceed with the nomination hearing for Waller to become the new Federal Reserve Chair. This statement aims to alleviate market concerns about the uncertainty of the Federal Reserve leadership transition and ensure the continuity of monetary policy.

Promoting the Federal Reserve Chair Nomination Hearing

Regarding the succession issue of the Federal Reserve Chair, Becerra urged the Senate Banking Committee not to stall due to the current legal disputes. He revealed in the CNBC program that after communicating with Republican members of the Senate Banking Committee, he believes the nomination hearing "will continue." Becerra emphasized,

"Initiating the hearing process is crucial, and I believe we have reached a consensus on this."

The current focus of controversy is the federal criminal investigation facing the current Federal Reserve Chair Powell. North Carolina Republican Senator Thom Tillis has vowed to block Waller's nomination in the Banking Committee unless the Department of Justice withdraws its investigation of Powell.

Waller, nominated by President Trump, is the main candidate to succeed Powell, but Trump has also stated that the investigation led by D.C. federal prosecutor Jeanine Pirro against Powell should continue, creating a potential political deadlock.

Investigation Controversy and Political Maneuvering

Regarding the investigation of Powell, Becerra clarified the White House's position, stating that the White House "has no influence over the actions of the D.C. federal prosecutor." However, he suggested that the Senate Banking Committee could also intervene in matters related to Powell's investigation. This investigation primarily focuses on Powell's previous testimony regarding cost overruns in the Federal Reserve headquarters renovation project.

Becerra stated that Senator Tillis previously rejected the proposal to transfer Powell's investigation from the Department of Justice to the Banking Committee. Regarding the current judicial process, Becerra commented, "We will wait and see how the investigation by Jeanine Pirro's office unfolds. Although subpoenas have been issued, this does not necessarily mean that charges will be filed." He added that investigators had previously contacted the Federal Reserve via email last December without success, before issuing the subpoenas Despite facing resistance from Senator Tillis, Bensent reiterated his confidence after attending the Senate Republican working group meeting on Tuesday that the hearing process will proceed as planned. This position indicates that the Trump administration is attempting to accelerate the establishment of new financial regulatory leadership while maintaining legal pressure on former officials to advance its economic policy agenda