Treasury Secretary Scott Bessent suggested on Monday that the government could open an investigation into the Federal Reserve, which has drawn President Donald Trump’s wrath for refusing to lower interest rates. 

Despite threats from the White House that he could be fired from his powerful position, Fed Chairman Jerome Powell has rebuffed Trump’s wishes for months, arguing that a steady hand on inflation is needed due to concerns the president’s global tariffs on many foreign goods could spike consumer prices in the United States.

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An examination of the Fed is necessary to see if it has guided the country successfully in setting economic outlooks and policy and to determine why Fed members have proved unable to “break out of a certain mindset,” Bessent said during an interview on CNBC’s Squawk Box over the weekend. Pointing out data showing inflation has fallen from a high of 9.1% in 2022 to 2.7% in June, declining even amid the tariffs, the treasury secretary contended that Powell and Fed members have failed to take a clear-minded approach to the matter.

“What we need to do is examine the entire Federal Reserve institution and whether they have been successful,” Bessent said.

“The Fed deals with monetary policy, regulations, financial stability. I think that we should think, ‘Has the organization succeeded in its mission?’” he added. “You know, 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? I mean, look at the … fearmongering over tariffs. And thus far, we have seen very little, if any, inflation. We’ve had great inflation numbers. So, you know, I think this idea of them not being able to break out of a certain mindset — you know, all these Ph.D.s over there, I don’t know what they do.” 

The possible investigation into the Fed comes as the White House confirmed last Thursday it is looking into investigating the chairman for his alleged management of the $2.5 billion renovation of two Fed buildings in Washington. Sen. Rand Paul (R-KY) also targeted the institution for an audit last week.

“No institution holds more power over the future of the American economy and the value of our savings than the Federal Reserve,” Paul said as he unveiled a bill seeking to audit the Fed. “It’s long past time for Congress to stop shirking its duty and hold the Federal Reserve accountable.”

The Fed’s conflict with Republicans will likely continue until Powell backs down from the war over interest rates.

The chairman, who pointed to the “possible effects in the short term of tariffs” in a recent Senate Banking Committee hearing, is waiting for inflation to be closer to the Fed’s 2% target before lowering rates, although the latest government data showed inflation declined to 2.3% in June, signaling that the U.S. is evading inflationary pain from Trump’s tariffs. 

When Trump unveiled global tariffs on U.S. trading partners in April, Powell warned the protectionist move would likely usher in higher inflation rates. 

“While uncertainty remains elevated, it is now becoming clear that the tariff increases will be significantly larger than expected,” the Fed chairman said. “The same is likely to be true of the economic effects, which will include higher inflation and slower growth.”

The Fed again resisted pressure from the White House to lower interest rates, due partly to concerns about possible inflation from tariffs, during its Federal Open Market Committee meeting in June. The FOMC decided to hold its policy rate steady at 4.25% to 4.5%, stating that while uncertainty about the economic outlook has diminished, risks of increased inflation and higher unemployment remain “elevated.” The Fed said it continued to await further clarity on trade policy and is assessing the impact of immigration limits on the labor market, according to Charles Schwab. 

After unveiling “Liberation Day” tariffs against a slew of countries in April, Trump has announced a handful of revised trade deals with partners, including the United Kingdom and China. 

The White House has signaled many more agreements, including with the European Union, could be on the horizon in the coming months, moves that could further ease tariff fears at the Fed and allow for reduced interest rates in the U.S. 

As White House officials confirmed last week that Trump has started asking Republican lawmakers if he should fire Powell over the interest rates disagreement, Bessent was rumored to be advising the president against doing so. Any move to oust the chairman would likely face swift legal challenges.

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The treasury secretary and the president have sought to quash such speculation, with Trump calling the report from the Wall Street Journal “a typically untruthful story.” 

Despite consultations with congressional Republicans about firing the Fed chairman, Trump has also expressed hesitancy about ousting Powell.