Davos (Switzerland) (AFP) – US Treasury Secretary Scott Bessent accused Federal Reserve Chairman Jerome Powell on Wednesday of “politicising” the institution, ratcheting up pressure on the central bank. President Donald Trump has accused Powell of not moving faster to cut interest rates, and the Fed chief revealed this month that the Justice Department has launched an investigation into him — a move former Fed chairs labelled an effort to undermine the bank’s independence.
Bessent on Wednesday criticised Powell for planning to attend a Supreme Court hearing on Trump’s attempt to fire Fed Governor Lisa Cook, calling his presence “a political statement.” “I am not sure why Chair Powell would go and support Governor Cook when the Fed has not undertaken an examination of whether she did in fact commit mortgage fraud,” Bessent said on the sidelines of the World Economic Forum in Davos, citing allegations Cook has denied. “The Fed should not be politicised. He is politicising the Fed.”
Trump has anchored his attempt to remove Cook, the first Black woman to serve on the central bank’s board of governors, on mortgage fraud allegations. She challenged the removal attempt and the Supreme Court allowed her to remain in her post until it hears her case. She has not been charged with a crime.
Trump renewed criticism of Powell in Davos on Wednesday, blaming Fed policymaking for holding back his achievements. “They stop you from being successful,” he said, adding that he planned to announce a new Fed chairman in the “not-too-distant future,” with Powell’s term at the helm ending in May. This month, Powell revealed that US prosecutors had opened an inquiry into him over an ongoing renovation of the Fed’s headquarters. Prosecutors sent the Fed subpoenas and threatened a criminal indictment relating to testimony Powell gave last summer about the remodelling.
Powell has dismissed the investigation as a politically motivated attempt to influence the central bank’s interest rate setting, and the heads of major central banks have thrown their support behind him. Trump has said he will judge Powell’s successor on whether they immediately cut rates.
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