US Treasury Chief Says Fed Chair Has No Reason to Step Down
Budget Secretary Defends Fed Chair Amid Trump Pressure
US Treasury Secretary Scott Bessent has publicly stated that there is no immediate reason for Federal Reserve Chair Jerome Powell to step down, a day after urging a comprehensive review of the central bank.
Key Points from Bessent’s Statements
- Powell’s term as Fed Chair is set to end in May 2026; Bessent recommends that he complete the full term if he wishes to stay.
- Should Powell choose to leave before the scheduled end, Bessent believes he should do so voluntarily.
- Bessent called for an exhaustive internal review of the Fed’s non-monetary policy operations, accusing the bank of mission creep.
- He emphasized that the Fed’s independence is a cornerstone of economic growth and stability, yet warned that persistent mandate expansion threatens this autonomy.
Trump’s Administration Targets the Fed
President Donald Trump has intensified attacks on the Fed, arguing that interest rates should be lowered to reduce the country’s debt burden and stimulate the economy. The administration cited modest inflation figures as justification for an interest rate cut.
Consequences of a Rate Cut
While a lower rate can boost economic activity, it can also lead to inflationary pressures and higher consumer prices. The Fed has been cautious in pursuing rate reductions, balancing inflation control against the health of the job market.
Upcoming Fed Meeting
The next policy meeting is scheduled for month‑end. Analysts expect the Fed to keep rates unchanged again, pending a clearer understanding of how Trump’s tariffs impact the economy in the coming months.
Fed Vice Chair Supports Independence
Fed Vice Chair for Supervision Michelle Bowman reiterated in a CNBC interview that the institution’s independence in setting monetary policy is very important.
Renovation Project as a Potential Quandary
The Fed’s headquarters renovation project has been spotlighted by Trump and Republican allies as a possible avenue for Powell’s ousting. Trump has recently ramped up attacks against the independent central bank chief over the Fed’s $2.5 billion renovation project.
