Bessent backs Fed independence on rates amid Trump criticism

The Hill

2 days ago

Treasury Secretary Scott Bessent defended the monetary independence of the Federal Reserve o after getting caught in the crossfire between President Trump and the Wall Street Journal.
Bessent said in a social media post on Monday evening that '[Fed] independence is a cornerstone of continued U.S. economic growth and stability.'
'The Fed's conduct of monetary policy 'is a jewel box' that should be walled off to preserve its independence,' he said.
Bessent's post sought to clarify comments he made in a Monday interview with CNBC, in which he called for a review of the Fed system. The Treasury secretary said on social media that the review should focus on 'mission creep' at the central bank, not its process for setting interest rates.
Bessent's comments follows months of Fed-bashing from President Trump that erupted last week when reports emerged that Trump had told Republican lawmakers that he might soon move to oust Powell.
Trump said later in the week that it was 'highly unlikely' he'd fire Powell but left the possibility open on the grounds that Powell might need to be removed for 'fraud' — a reference to a cost overrun for facility renovations the Fed is undertaking now in Washington.
The Journal reported Sunday that Bessent, who has assuaged markets throughout Trump's tumultuous trade war, told the president he shouldn't fire Fed chair Jerome Powell and laid out a comprehensive case as to why.
Bessent went through the possible negative reaction from financial markets, the legal challenges the White House could face for trying to fire the Fed chair, and the fact that the Fed is already projecting rate cuts later this year, the Journal reported.
The story enraged Trump, who called it 'untruthful' and said he didn't require any counseling on financial matters or on the leadership of the Fed.
'Nobody had to explain that to me. I know better than anybody what's good for the market, and what's good for the U.S.A.,' Trump fumed on social media. 'If it weren't for me, the market wouldn't be at record highs right now, it probably would have crashed! So, get your information correct. People don't explain to me, I explain to them!'
Bessent downplayed his advice to the president on CNBC, saying his remarks were just one of many data points for Trump to consider.
'President Trump solicits a whole range of opinions and then makes a decision. So, he takes a lot of inputs, and at the end of the day, it's his decision,' Bessent told CNBC on Monday.
Bessent also distanced himself from the controversy over the Fed's ongoing facility renovations, which have been singled out by White House Office of Management and Budget director Russ Vought.
'I have no knowledge or opinion on the legal basis for the massive building renovations being undertaken on Constitution Avenue,' Bessent wrote online.
Bessent has sought to balance his loyalty toward Trump with soothing concerns about the president's potential impact on the Fed.
He accused the Fed of 'fear-mongering over tariffs' during a CNBC interview on Monday.
Last month, he also said he'd be willing to step into the role of Fed chair if he was asked by President Trump to do so.
'I will do what the president wants,' he said in an interview with Bloomberg News, adding that he was pleased with his current position as Treasury secretary.