Bessent Pushes Growth Case as Fed Faces PCE, Jobs Data Test

US Treasury Secretary Scott Bessent has made a public case that the American economy’s rapid growth need not translate into higher inflation, setting up a week in which fresh price and employment data will test that view against a Federal Reserve that has already returned to raising interest rates. Speaking to Newsmax on Sunday, Mr Bessent described the current period as “the acceleration phase” of the administration’s economic agenda, according to Yahoo Finance.

He pointed to the Atlanta Fed’s estimate of 5.0 per cent annualised growth in gross domestic product for the current quarter, and argued that core inflation had been subdued and had actually eased over the past few months. Mr Bessent also said the administration had wanted a Fed chair with an open mind in Kevin Warsh, and drew a comparison with the late 1990s under Alan Greenspan, when strong productivity growth allowed the economy to expand without a sustained rise in inflation.

A Fed in tightening mode

The comments come less than two weeks after the Federal Open Market Committee raised its benchmark rate by 25 basis points to a range of 3.75 to 4.00 per cent at its meeting ending 16 September. The unanimous 12-0 decision was the Fed’s first rate increase since 2023. Mr Warsh said at the time that inflation was too high and had been for too long.

The Fed’s updated projections showed most officials expecting at least one more increase this year, though reports differ on the exact count: Charles Schwab put it at 16 of 19 participants, while a JPMorgan Chase summary said 16 of 18. Consumer price inflation for August rose 0.4 per cent from the previous month and 3.4 per cent from a year earlier. The next FOMC meeting is scheduled for 27-28 October.

Mr Bessent’s remarks can be read as an effort to temper expectations of aggressive further tightening. With the 10-year Treasury yield around 5.2 per cent and mortgage rates above 7 per cent, the administration has a clear interest in arguing that growth is productivity-led rather than inflationary.

A crowded data calendar

This week offers the Fed plenty of evidence to weigh. Fed Vice Chair for Supervision Michelle Bowman, Governor Lisa Cook and Richmond Fed President Tom Barkin are scheduled to speak on Monday, followed on Tuesday by six Fed speakers including New York Fed President John Williams and Governor Christopher Waller. Tuesday also brings the Conference Board’s consumer confidence index and the latest job openings data.

The centrepiece arrives on Wednesday, 30 September, with August data on personal consumption expenditures, the Fed’s preferred inflation gauge. Economists expect core PCE to rise 0.3 per cent from the previous month, according to FXEmpire, compared with 0.2 per cent in July. The Cleveland Fed’s nowcast points to headline PCE inflation of about 3.78 per cent and core inflation of 3.40 per cent year-on-year. The ADP private payrolls report and a revision to second-quarter GDP are due the same day.

Thursday brings the ISM manufacturing survey, and the week closes on Friday with the September employment report. Forecasts vary widely: FXEmpire cites a consensus of 98,000 new jobs, compared with 162,000 in August, while Barclays economist Marc Giannoni expects a gain of about 50,000. The unemployment rate is forecast at 4.1 per cent.

Why it matters for markets

The data will shape expectations for the October Fed meeting and, by extension, the direction of Treasury yields, which have climbed to their highest levels in nearly two decades. A strong core PCE reading combined with a solid jobs report would reinforce the case for another hike, while softer figures would support Mr Bessent’s argument that inflation is under control. Equity markets, already under pressure from high oil prices and rising yields, are likely to react sharply to any surprise.

Corporate results also feature. Accenture reports its fourth-quarter and full-year fiscal 2026 results on Thursday, 1 October, and Nike reports after the US market close the same day.

The India angle

For Indian investors, two items on the calendar stand out. First, the path of US rates is a key driver of foreign portfolio flows into Indian equities and bonds. Higher US yields have already encouraged overseas investors to sell Indian shares this year and have added to pressure on the rupee, which opened near 95.86 to the dollar on Monday. A hawkish signal from US data would likely extend those trends.

Second, Accenture’s results are closely watched as a read-across for Indian IT services companies such as TCS, Infosys, Wipro and HCLTech, which begin reporting September-quarter earnings in the coming weeks. Its commentary on client spending, deal wins and demand for artificial intelligence services will be parsed for signals about the sector, whose stocks have fallen sharply from their peaks this year.

What happens next

After this week’s data, attention will shift to the Fed’s 27-28 October meeting, where officials will decide whether to follow September’s hike with another. The direction of oil prices, which depend partly on US-Iran talks, and the trajectory of long-term Treasury yields will also weigh on that decision. For now, the administration and the central bank appear to be reading the same economy in different ways, and the numbers due this week will help settle which interpretation markets believe.