- In a CNBC interview, Treasury Secretary Scott Bessent suggested for a review of the Federal Reserve that would go beyond the current controversy over building renovations and look at its overall function.
- The comments come amid an intensifying conflict between the White House and the central bank.
- Bessent backed the idea that the Fed probably should be easing with inflation mostly moderating.
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Treasury Secretary Scott Bessent on Monday suggested a review of the Federal Reserve that would go beyond the current controversy over building renovations and look at its overall function.
“What we need to do is examine the entire Federal Reserve institution and whether they have been successful,” Bessent said during an interview on CNBC’s ”
Squawk Box
.” “Has the organization succeeded in its mission? If this were the [Federal Aviation Administration] and we were having this many mistakes, we would go back and look at why has this happened.”
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The comments come amid
an intensifying conflict
between the White House and the central bank.
Last week saw conflicting reports over whether President
Donald Trump
was preparing to fire Fed Chair
Jerome Powell
. Reports from the White House indicated
a move was forthcoming
, but Trump soon after denied he is readying what would be a legally questionable maneuver.
Bessent has been at the center of the controversy, both as
a potential successor
at the Fed as well as reports pointing to the Treasury chief as a mediator looking to discourage Trump from ousting Powell.
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“President Trump solicits a whole range of opinions and then makes a decision,” Bessent said when asked about
a Wall Street Journal report
that he had helped convince Trump to stay his hand on Powell. “So he takes a lot of inputs, and at the end of the day it’s his decision.”
Trump
has demanded the Fed
dramatically lower its benchmark overnight borrowing rate, something that appears unlikely regardless of the chair.
In addition, the administration in recent days has criticized the Fed for
cost overruns
at the $2.5 billion renovation it has undertaken for two of its buildings in Washington. Administration officials reportedly are planning soon to view the project in person.
On the question of interest rates, Bessent backed the idea that the Fed probably should be easing with inflation mostly moderating.
“They were fear mongering over tariffs, and thus far we have seen very little if any inflation,” Bessent said. “We’ve had great inflation numbers. So, you know, I think this idea [is] of them not being able to break out of a certain mindset. All these PhDs over there, I don’t know what they do.”
The Fed last cut rates in December, which completed a brief easing cycle that brought the fed funds rate down a full percentage point. However, as the Fed eased both mortgage rates and Treasury yields moved higher.
Market pricing indicates the Fed probably will cut again in September.
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Brexit made businesses abandon the UK. Trump’s EU tariffs could bring them back
-
From Irish whiskey to Italian cheese, Trump’s tariff threat rattles EU exporters
-
Inflation outlook tumbles to pre-tariff levels in latest University of Michigan survey
