Treasury Secretary Scott Bessent on Friday called for renewed scrutiny of the Federal Reserve, including its power to set interest rates, as the Trump administration intensifies its efforts to exert control over a central bank whose insulation from short-term political pressures is widely seen as key to effective control of inflation.
“There must also be an honest, independent, nonpartisan review of the entire institution, including monetary policy, regulation, communications, staffing and research,” Bessent wrote in the Wall Street Journal, also calling for the Fed to leave bank supervision to other governmental authorities and to “scale back the distortions it causes in the economy,” including by bond purchases made outside of true crisis conditions.
“The Fed must change course,” he said in a longer piece published in The International Economy that excoriated the Fed for policies he said helped feed inflation, enriched the rich at the expense of the poor, and exacerbated the housing affordability crisis.
He also accused the central bank of partisanship and misusing public funds for everything from a renovation of its headquarters to its police force, amplifying charges made by Fed critics within and outside of the Trump administration that the Fed has argued don’t reflect the facts.
Bessent’s barrage of criticism – which he characterized as a bid to restore the Fed’s independence – came as he began a series of interviews on Friday in search of candidates to replace Fed Chair Jerome Powell, whose term ends in May, a source familiar with the process said. It was not immediately clear who would be interviewed.
President Trump has been unhappy with Powell since shortly after making him Fed chair in 2018, and all this year has ratcheted up the pressure on the Fed to lower rates and has moved to install allies at the central bank who will push for cuts.
Last week he said he was removing Fed Governor Lisa Cook over allegations of mortgage fraud, which Cook says are unfounded; Cook is suing to stop the firing and remains in her job for now.
Trump’s nominee to fill an open seat at the Fed, Stephen Miran, said at his nomination hearing this week that he’ll take unpaid leave from his job as White House economic advisor while he does the Fed job, a situation that Democrats say impugns his ability to make monetary policy decisions independently of the president.
The White House has previously indicated that the list of potential Powell successors includes National Economic Council director Kevin Hassett and former Fed Governor Kevin Warsh along with current Fed Governor Christopher Waller.
Some of Bessent’s criticisms echo those of the Fed chair candidates; Warsh, for instance, has long called for “regime change” at the Fed.
The Fed’s Waller was one of two Fed governors to dissent against the Fed’s decision in July not to cut interest rates.
The Fed does look set to kick off a series of reductions this month to shore up an increasingly fragile labor market, though no current policymakers have signaled support for the kind of deep rate cuts that Trump has demanded or the wholesale remaking of the Fed that Bessent is now advocating.
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