Washington (AFP) – US Treasury Secretary Scott Bessent said Tuesday that he did not see a reason for Federal Reserve Chair Jerome Powell to resign immediately, a day after calling for a sweeping review of the Fed. Bessent’s comments to Fox Business come as Powell faces growing pressure from Donald Trump’s administration to slash interest rates, with the president recently ramping up attacks against the independent central bank chief over the Fed’s $2.5 billion renovation project.
But Trump has said it was highly unlikely he would oust Powell before his tenure is up next year, and on Tuesday told reporters: “I think he’s done a bad job, but he’s going to be out pretty soon anyway.” Bessent added in his television interview, referring to Powell: “There’s nothing that tells me that he should step down right now.” He noted that Powell’s term as Fed chair ends in May 2026, and that Powell should see out his full term if he wants to. But if the Fed chief wanted to leave early, he should as well, Bessent added.
Late Monday in a social media post, Bessent called for the Fed to conduct an “exhaustive internal review of its non-monetary policy operations,” accusing the central bank of mission creep. Bessent, in his post on X, said the Fed’s “independence is a cornerstone of continued US economic growth and stability.” “However, this autonomy is threatened by persistent mandate creep into areas beyond its core mission,” he added, without specifying which policy areas.
The Treasury chief had told CNBC earlier in the day that “what we need to do is examine the entire Federal Reserve institution and whether they have been successful.” On Tuesday, Fed Vice Chair for Supervision Michelle Bowman maintained in a CNBC interview that the central bank’s independence in setting monetary policy is “very important.” The Fed has held interest rates steady this year as it monitors the effects of Trump’s sweeping tariffs since returning to the White House — drawing ire from the president.
Trump has repeatedly cited mild inflation numbers as a reason the Fed should lower rates, arguing that the country would also pay less interest on debt coming due. Trump said Tuesday that interest rates should be three percentage points lower. But lower rates, while a boost to the economy, can also increase consumer prices. Fed officials have been proceeding cautiously with rate cuts amid warnings that Trump’s tariffs could fuel consumer price hikes and weigh on economic growth.
When mulling changes to the benchmark lending rate, officials seek to balance between reining in inflation and maintaining the health of the jobs market. Policymakers expect to have a better understanding of how the levies impact the economy in the summer months. The Fed holds its next policy meeting at month-end, and is widely expected to keep rates unchanged again. Trump and other Republican allies have recently zoomed in on the Fed’s headquarters renovation project as a potential avenue for Powell’s ousting.
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