US Treasury chief says no reason for Fed chairman Jerome Powell to step down

WASHINGTON – US Treasury Secretary Scott Bessent said on July 22 that he did not see a reason for Federal Reserve chairman Jerome Powell to resign immediately,

a day after calling for a sweeping review of the Fed

.

Mr Bessent’s comments in a Fox Business interview come as Mr Powell faces

growing pressure from US President Donald Trump’s administration to slash interest rates

, with Mr Trump recently ramping up attacks against the independent central bank chief over the Fed’s US$2.5 billion (S$3.2 billion) renovation project.

“There’s nothing that tells me that he should step down right now,” Mr Bessent said, referring to Mr Powell.

He noted that Mr Powell’s term as Fed chairman ends in May 2026, and that Mr Powell should see out his full term if he wants to.

But if the Fed chief wanted to leave early, he should as well, Mr Bessent added.

Late on July 21 in a social media post, Mr Bessent called for the Fed to conduct an “exhaustive internal review of its non-monetary policy operations”, accusing the central bank of mission creep.

Mr Bessent, in his post on X, said the Fed’s “independence is a cornerstone of continued US economic growth and stability”.

“However, this autonomy is threatened by persistent mandate creep into areas beyond its core mission,” he said, without specifying which policy areas.

The Treasury chief had told CNBC earlier on July 21 that “what we need to do is examine the entire Federal Reserve institution and whether they have been successful”.

On July 22, Fed vice-chairman for supervision Michelle Bowman maintained in a CNBC interview that the central bank’s independence in setting monetary policy is “very important.”

The Fed has held interest rates steady this year as it monitors the effects of

Mr Trump’s sweeping tariffs since returning to the White House

– drawing ire from the US President.

Mr Trump has repeatedly cited mild inflation numbers as a reason the Fed should lower rates, arguing as well that the country would also pay less interest on debt coming due.

But lower rates, while a boost to the economy, can also increase consumer prices.

Fed officials have been proceeding cautiously with rate cuts amid warnings that Mr Trump’s tariffs could fuel consumer price hikes and weigh on economic growth.

When mulling changes to the benchmark lending rate, officials seek to balance between reining in inflation and maintaining the health of the jobs market.

Policymakers expect to have a better understanding of how the tariffs impact the economy in the summer months.

The Fed holds its next policy meeting at the end of July, and is widely expected to keep rates unchanged again.

Mr Trump and other Republican allies have recently zoomed in on the Fed’s headquarters renovation project as a potential avenue for Mr Powell’s ousting. AFP