U.S. Treasury Secretary Scott Bessent is calling for a review of the central bank’s operations as Federal Reserve Chair Jerome Powell faces mounting pressure to resign.
In a new interview with Bloomberg Television, Bessent says that the Federal Reserve is in need of deeper scrutiny as its budget and operations have expanded over the years.
Bessent’s comments come as President Donald Trump has said he hopes Powell quits and has also considered attempting to remove him, all while slamming the Fed chair for not cutting interest rates.
“The President has said he is not going to fire Chair Powell. I was somewhat surprised that [economist] Mohamed El-Erian came out and said that [Powell should resign]. And what I’ve come out and said is that I believe that it would do Chair Powell a favor, and he would be doing the institution a favor, if he did an internal review, separate monetary policy from everything else.
And this is something that [economist and former U.S. Secretary of the Treasury] Larry Summers and I agree on, is this mission creep from the Fed is endangering their independence of monetary policy, all these other things that they’re engaging in could threaten monetary policy.
It is a big, sprawling institution. The central budget for the board is up 4x since 2004, and every institution needs to examine themselves.”
Bessent also says he’d support Powell overseeing the agency’s review, despite the criticism he’s facing.
“It could be a committee. It could be a group. They could invite outside experts in. The Bank of England after the 2022 rate hike shock went back and did a very good examination of what went wrong with monetary policy that brought in outside experts. I think an internal review would be a good start. And if the internal review didn’t look like it was serious, then maybe their could be an external review.”
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