By Andrea Shalal

WASHINGTON, April 14 (Reuters) - U.S. Treasury Secretary Scott Bessent on Tuesday said he was quite confident that core inflation would continue to go down in the United States despite the Iran war, and repeated his call for the Federal Reserve to cut its interest rates.

Bessent said he could understand if U.S. central bankers wanted to observe economic developments related to the war before they cut rates, adding that it also made sense for U.S. President Donald Trump's nominee as Fed chair, Kevin Warsh, to lead the next cycle of monetary adjustments.

Asked if the Trump administration would accept current Fed Chair Jerome Powell staying in the top spot after his term ends on May 15, if Warsh's nomination was not approved by the Senate by then, Bessent said, "We want Kevin Warsh in as soon as possible."

Bessent told Semafor on Monday that the Federal Reserve should "wait and see" before deciding whether to lower interest rates amid the war in Iran, noting that the U.S. economy had been "very strong" in January and February, and that the Fed is "doing the right thing by sitting and watching" how the conflict plays out.

Asked if that signaled a shift in the Trump administration's longstanding calls for the Fed to cut interest rates, Bessent said, "No, no, no. If you notice, I said that they could, they could observe before they cut rates. So ... the impetus here is (that) they still, they will need to cut rates."

Bessent downplayed the impact of the Iran war on core inflation, which he said was under control and actually dropping in many categories. He said he expected prices to come down quickly after the conflict ended.

U.S. consumer prices rose by the most in nearly four years in March as the war drove a record surge in the cost of gasoline and diesel, dealing a blow to Trump's approval ratings as discontent grew over his handling of the economy.  Core prices excluding food and energy rose less. 

The war has sent global crude oil prices surging as much as 50%, with the national average retail gasoline price breaking above $4 a gallon for the first time in more than three years.

Trump's nomination of Warsh to succeed Powell at the helm of the Fed is stalled for now due to objections by a key Republican senator, Thom Tillis, who is not running for reelection.

Tillis said he will continue to block all of Trump's Fed nominees until a Justice Department criminal investigation of Powell is closed.

Powell has said he will stay on as chair temporarily if Warsh is not confirmed and in place by the time his term expires next month. Powell also holds a governor slot that runs through 2028, if he wishes to stay.

Bessent said Treasury had a deal with Tillis to allow Warsh's nomination hearing to proceed, something that could happen next week, but gave no further details.