Treasury Secretary Scott Bessent said Monday he would like to see a top-to-bottom review of the Federal Reserve to ensure if it is doing a good job for the American people.
Mr. Bessent weighed in as President Trump slammed the central bank’s chair, Jerome Powell, for refusing to slash interest rates.
“What we need to do is examine the entire Federal Reserve institution and whether they have been successful,” Mr. Bessent said on CNBC’s “Squawk Box.” “Has the organization succeeded in its mission?”
The secretary suggested the Fed has made a series of “mistakes” by giving in to fear about Mr. Trump’s tariffs.
“All these Ph.D.s over there, I don’t know what they do. This is like universal basic income for academic economists,” Mr. Bessent said.
Mr. Powell is reluctant to slash rates because of the shifting nature of Mr. Trump’s tariff agenda and the possibility of inflation. The chair says he is not focused on politics and only concerned about his twin mandate of ensuring maximum employment and stable prices.
Mr. Trump has downplayed speculation he is about to fire Mr. Powell, though he seems ready to make life miserable for the chair.
His allies in recent weeks raised questions about the cost of a renovation project at the Fed building in Washington. Mr. Trump even hinted that he could fire Mr. Powell if there is “fraud,” though didn’t elaborate.
Mr. Powell says Mr. Trump doesn’t have the power to fire him before his term ends in May.
His abrupt termination would likely spook markets, because investors expect the Fed to operate free of political pressure.
Sen. Elizabeth Warren, Massachusetts Democrat, recently said markets would “crash” if Mr. Powell was fired.
Mr. Bessent on Monday said Ms. Warren is no fan of Mr. Powell, either, but he wouldn’t “deal in hypotheticals” around a potential firing and market disruption.
The Treasury secretary piled on the Fed while the White House tries to negotiate trade deals before Mr. Trump’s Aug. 1 deadline, when hefty tariffs will kick in.
The U.S.-European Union negotiation is the marquee event right now. The European bloc faces a 30% tariff on goods its companies send to the U.S. unless it can strike a deal with Mr. Trump.
“It doesn’t have to get ugly,” Mr. Bessent said. “There’s a lot of back and forth.”
He said some “underlying” nations within the bloc might be frustrated by the pace of negotiations emanating from EU bigwigs in Brussels.
The U.S. trade deficit with the EU was $235 billion in 2024, meaning European producers sell a far higher dollar amount in products to U.S. consumers, versus the amount that U.S. producers sell to Europeans.
“It will affect them more,” Mr. Bessent said. “I would imagine they would want to negotiate faster.”
Mr. Trump, meanwhile, says he is content to impose a high tariff on products from other nations if he cannot negotiate a deal. He says it should compel foreign companies to set up shop in America, so they avoid tariffs when they sell to the rich American consumer market.
“We’re more concerned with high-quality deals than getting these deals done by Aug. 1.,” Mr. Bessent said. “We’re not going to rush for the sake of doing deals.”
• Tom Howell Jr. can be reached at thowell@washingtontimes.com.