US treasury secretary Scott Bessent has called for an inquiry into the “entire Federal Reserve institution”, in the latest sign of how top Trump administration officials are cranking up pressure on the central bank.
“What we need to do is examine the entire Federal Reserve institution and whether they have been successful,” Mr Bessent told CNBC on Monday.
Mr Bessent’s comments come as US President Donald Trump and his lieutenants have sharply criticised the Fed and its chair Jay Powell for refraining to cut borrowing costs this year. Trump last week asked a group of Republican lawmakers whether he should sack Powell, but later clarified that he had no plans to do so unless he needs to “leave for fraud”.
Mr Trump’s government has also recently opened a new front in their campaign against the Fed, with the president’s budget director Russell Vought repeatedly alleging that a $2.5 billion (€2.1 billion) renovation of the central bank’s headquarters has been grossly mismanaged.
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Bessent amped up his criticism of the Fed on Monday, saying that if the Federal Aviation Administration had made as many mistakes, “then we would go back and look at why this has happened”.
The Fed inspector general is reviewing the renovation of its headquarters, which involves an overhaul of two buildings that overlook the National Mall and is $700 million over budget. Powell has also written to senior senators to explain how the US central bank is reining in costs.
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On Monday, the Fed published a video tour of the two buildings, which were built in the 1930s, that are undergoing works.
The focus on the plans follows repeated attacks from Mr Trump on Mr Powell over the Fed’s stance on interest rates, with the president labelling the central bank chair a “stubborn mule”.
After enacting 1 percentage point in rate cuts over September to December, most rate-setters want to keep borrowing costs on hold at 4.25 to 4.5 per cent as they weigh up the impact of the US president’s trade war on inflation.
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The Consumer Price Index figure for June showed prices rising at their fastest pace since February, with the headline rate hitting 2.7 per cent. Central bankers target 2 per cent personal consumption expenditures inflation.
Economists are expecting further rises in price pressures over the coming months, but Trump wants rates slashed to as low as 1 per cent.
Mr Bessent claimed that the Fed was “fear-mongering over tariffs” and said the US had seen “great inflation numbers”.
Mr Bessent was seen as one of the front-runners to replace Mr Powell, who is set to step down as chair in May 2026. But Mr Trump said this month that he was happy where his treasury secretary is, before indicating that National Economic Council chair Kevin Hassett was among the top contenders. - Copyright The Financial Times Limited 2025
