Scott Bessent calls for probe into ‘the entire Federal Reserve institution’
Treasury secretary is latest top Trump administration official to criticise the US central bank
US Treasury secretary Scott Bessent has called for an inquiry into the “entire Federal Reserve institution”, in the latest sign of how top Trump administration officials are cranking up pressure on the central bank.
“What we need to do is examine the entire Federal Reserve institution and whether they have been successful,” Bessent told CNBC on Monday.
His comments come as President Donald Trump and his lieutenants have sharply criticised the Fed and its chair Jay Powell for refraining from cutting borrowing costs this year. Trump last week asked a group of Republican lawmakers whether he should sack Powell, but later clarified that he had no plans to do so unless he needed to “leave for fraud”.
Bessent later posted on X that while the independence of the Fed “is a cornerstone of continued US economic growth and stability . . . this autonomy is threatened by persistent mandate creep into areas beyond its core mission”.
He added that this provoked “justifiable criticism that unnecessarily casts a cloud over the Fed’s valuable independence on monetary policy”.
The Trump administration has also recently opened a new front in its campaign against the Fed, with the president’s budget director Russell Vought repeatedly alleging that a $2.5bn renovation of the central bank’s headquarters has been grossly mismanaged.
Bessent amped up his criticism of the central bank on Monday, saying that if the Federal Aviation Administration had made as many mistakes, “then we would go back and look at why this has happened”.
The Fed inspector general is reviewing the renovation of its headquarters, which involves an overhaul of two buildings that overlook the National Mall and is $700mn over budget. Powell has also written to senior senators to explain how the US central bank is reining in costs.
On Monday, the Fed published a video tour of the two buildings, which were built in the 1930s, that are undergoing work.
The focus on the plans follows repeated attacks from Trump on Powell over the Fed’s stance on interest rates, with the president labelling the central bank chair a “stubborn mule”.
After enacting 1 percentage point in rate cuts over September to December, most rate-setters want to keep borrowing costs on hold at 4.25-4.5 per cent as they weigh up the impact of the US president’s trade war on inflation.
The Consumer Price Index figure for June showed prices rising at their fastest pace since February, with the headline inflation rate hitting 2.7 per cent. Central bankers have struggled to reach their 2 per cent target since the pandemic, when supply shortages and record fiscal stimulus from the Biden Administration sparked the worst bout of inflation in a generation.
Economists are expecting further rises in price pressures over the coming months, but Trump wants rates slashed to as low as 1 per cent, with the president claiming that the Fed’s policies are raising the government’s refinancing costs by hundreds of billions of dollars.
Bessent claimed that the Fed was “fear-mongering over tariffs” and said the US had seen “great inflation numbers”.
While most investors do not expect the Fed to cut interest rates until at least September, some central bank officials are likely to back lower borrowing costs as soon as next week.
Christopher Waller, a Fed governor who is in the running to replace Powell as chair, has said a weakening of the US labour market justifies a 25 basis points cut in borrowing costs.
Powell is set to step down from his role at the helm of the world’s most powerful central bank in May 2026.
Bessent was seen as another one of the front-runners in the race to lead the Fed. But Trump said this month that he was happy where his Treasury secretary is, before indicating that National Economic Council chair Kevin Hassett was among the top contenders.