U.S. Treasury Secretary Calls for Review of Fed’s Performance

Quick overview

U.S. Treasury Secretary Scott Bessent said on Monday that the Federal Reserve and its Board of Governors should be reviewed, citing several recent policy missteps and an excessive reaction to tariff threats that have not materially affected inflation.

In an interview with CNBC, Bessent stated that removing Fed Chair Jerome Powell would ultimately be President Donald Trump’s decision, but emphasized that the central bank’s recent actions warrant serious examination.

“I think what we need to do is look at the entire institution of the Federal Reserve and ask whether it has succeeded,” Bessent said. He is expected to deliver opening remarks at the Fed’s headquarters Monday evening during the kickoff of a regulatory policy conference.

Drawing a sharp analogy, he added:

“If we were at the FAA and made this many mistakes, we’d go back and review what went wrong. All those PhDs at the Fed—I don’t know what they’re doing.”

Fed Under Fire for Overspending and Rate Inaction

The remarks come amid escalating tensions between the Trump administration and the Fed. Over recent months, President Trump has repeatedly lashed out at Powell, urging him to resign over his reluctance to cut interest rates, which remain in the 4.25%–4.50% range. Trump has also criticized a $2.5 billion renovation of the Fed’s Washington headquarters, alleging potential fraud due to budget overruns.

Powell defended the renovation last week, responding to inquiries from Trump officials. He noted that the project includes extensive security upgrades and the removal of hazardous materials.

Bessent, for his part, declined to comment on warnings that Powell’s removal could trigger a significant sell-off in U.S. financial markets.

Upcoming Fed Meeting in Focus

The Federal Open Market Committee (FOMC) will hold its next two-day policy meeting on July 29–30. So far in 2025, the Fed has opted to keep rates steady amid mixed inflation signals and political pressure.

Although Powell’s term as Fed Chair ends in May 2026, he remains a Board Governor until January 2028. Market participants remain divided over whether the Fed will begin to cut rates this year, despite Trump’s public demands. However, many economists are still forecasting at least two rate cuts before year-end.

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Ignacio Teson

Economist and Financial Analyst

Ignacio Teson is an Economist and Financial Analyst. He has more than 7 years of experience in emerging markets. He worked as an analyst and market operator at brokerage firms in Argentina and Spain.

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