Washington — US treasury secretary Scott Bessent on Monday said the entire Federal Reserve needed to be examined as an institution and whether it had been successful.
Bessent, speaking with CNBC, declined to comment on a report that he had advised President Donald Trump not to fire Fed chair Jerome Powell, saying it would be the president’s decision. But he said the institution should be reviewed, citing what he called “fearmongering over tariffs” despite the emergence thus far of little, if any, inflationary effect.
“I think that what we need to do is examine the entire Federal Reserve institution and whether they have been successful,” Bessent said, adding that he would give a keynote speech at the US central bank on Monday evening at the start of a regulatory conference.
“If this were the (Federal Aviation Administration) and we were having this many mistakes, we would go back and look at why. Why has this happened?” he said. “All these PhDs over there, I don’t know what they do.”
Trump has railed repeatedly against Powell and urged him to resign because of the central bank’s reluctance to deliver interest rate cuts. In recent days the president has also taken aim at a $2.5bn renovation at the Fed’s Washington headquarters that has exceeded its budget, suggesting there could be fraud involved and it might be a reason to oust Powell.
Powell last week responded to a Trump administration official’s demands for information about cost overruns on the project, saying it was large in scope and involved a number of safety upgrades and hazardous materials removals.
Bessent declined to be drawn on predictions that US financial markets could crash if Powell was ousted.
Powell’s term as chair ends in May 2026 though he is due to stay on as a Fed governor through January 2028.
Bessent noted that Powell’s term ends in May, adding that another governor seat would come open in January.
On Monday, the Fed added a video tour and new details about the renovation of two historical buildings at its headquarters in Washington on its website.
The six-minute, 23 second video indicates it was recorded on July 18 and depicts construction scenes overlaid with text descriptions of the project and some of the challenges encountered, such as asbestos abatement and preservation of details like a long-disused skylight with a decorative eagle.
It shows the installation of infrastructure like blast-protected windows and modern heating, plumbing and electrical systems.
The White House is continuing its reviews of the Fed building project and officials hope to schedule a visit this week, a White House official said on Monday.
White House deputy chief of staff James Blair, one of three administration officials newly appointed to the national capital planning commission, told reporters last week that officials from the White House and the office of management and budget as well as several legislators want to visit the facility during the day.
The Fed also posted fresh materials detailing aspects of the project that drew particular White House criticism as lavish, including what NCPC planning documents describe as a “Governors’ private elevator” leading to “executive dining rooms”.
“The descriptive labels are not representative of our previous or planned use of these spaces,” the Fed’s new materials said, noting that the elevator’s use is not limited to governors, and the rooms at issue are multi-use and not part of a “dining suite” as the plans describe.
The US central bank also posted diagrams with big red X marks showing where planned water features on the campus grounds had been eliminated, saving costs.
An added section to the FAQs part of the materials described the buildings’ heritage, including their use as a planning site for the Manhattan Project atomic weapons programme during World War 2, complete with a 24-hour guard by sharpshooters.
The Fed is widely expected to leave its benchmark interest rate in the 4.25%-4.50% range at a two-day policy meeting next week.
Powell and most of his colleagues say that while inflation has cooled, they expect President Donald Trump’s import tariffs to result in higher prices in coming months and consider that a rate cut now could help to reignite inflation.
The Fed reduced borrowing costs three times in the last four months of 2024 but has left its policy rate unchanged since December.
Reuters
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