Treasury Secretary Scott Bessent on Monday suggested a comprehensive review of the Federal Reserve that would extend beyond the current controversy surrounding its building renovations and focus on the institution’s overall effectiveness.
“What we need to do is examine the entire Federal Reserve institution and whether they have been successful,” Bessent said during an interview on CNBC’s Squawk Box. “Has the organization succeeded in its mission? If this were the [Federal Aviation Administration] and we were having this many mistakes, we would go back and look at why has this happened.”
His remarks come amid growing tensions between the White House and the central bank, though details on what form a review might take or who would conduct it remain unclear.
Last week saw conflicting reports about whether President Donald Trump was preparing to fire Fed Chair Jerome Powell. While White House sources suggested such a move was imminent, Trump later denied plans for what would be a legally questionable action.
Bessent has been at the center of the controversy, both as a potential Fed successor and as a Treasury official reportedly acting as a mediator to dissuade Trump from ousting Powell.
“President Trump solicits a whole range of opinions and then makes a decision,” Bessent said when asked about a Wall Street Journal report that he helped convince Trump to hold off on removing Powell. “So he takes a lot of inputs, and at the end of the day it’s his decision.”
Trump has repeatedly pushed for the Fed to drastically lower its benchmark overnight borrowing rate, a move that appears unlikely regardless of who chairs the Fed.
The administration has also criticized the Fed recently over cost overruns in its $2.5 billion renovation of two Washington buildings, with officials reportedly planning an on-site inspection soon.
Regarding interest rates, Bessent supported the notion that the Fed should probably be easing as inflation continues to moderate.
“They were fear mongering over tariffs, and thus far we have seen very little, if any, inflation,” Bessent said. “We’ve had great inflation numbers. So, you know, I think this idea [is] of them not being able to break out of a certain mindset. All these Ph.D.s over there, I don’t know what they do.”
The Fed last cut rates in December, concluding a short easing cycle that lowered the fed funds rate by a full percentage point. However, mortgage rates and Treasury yields rose despite the easing.
Market expectations currently indicate the Fed is likely to cut rates again in September.
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