US Treasury Secretary: Fed needs to be examined as an institution
Speaking on US business news channel CNBC on Monday, Bessent was asked whether he thinks President Donald Trump should fire Fed Chair Jerome Powell.
The treasury secretary said, "I think that what we need to do is examine the entire Federal Reserve institution and whether they have been successful."
Bessent has been critical of monetary policies that the Fed has implemented. His remarks are seen as an indication that the Fed policies, including those in the past, also need to be examined.
Regarding the impact of the Trump administration's tariff policy, Bessent said, "there was fear mongering over tariffs, and thus far, we have seen very little, if any, inflation."
He expressed the belief that a rate cut is possible, saying "We've had great inflation numbers."
It is rare that a US Treasury Secretary refers to the need to examine the Fed, which is supposed to be independent of the government.
Bessent was apparently trying to pressure the central bank to cut interest rates.
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The Mainichi
5 hours ago
- The Mainichi
Trump and Powell bicker over Fed building renovations as president ratchets up pressure campaign
WASHINGTON (AP) -- After months of criticizing Federal Reserve Chair Jerome Powell, President Donald Trump took the fight to the Fed's front door on Thursday, publicly scorning the central bank chief over the ballooning costs of a long-planned building project. Powell pushed back, challenging the president's latest price tag as incorrect. Wearing hard hats and grim faces, standing in the middle of the construction project, Trump and Powell addressed the assembled TV cameras. Trump charged that the renovation would cost $3.1 billion, much higher than the Fed's $2.5 billion figure. Powell, standing next to him, shook his head. The Fed chair, after looking at a paper presented to him by Trump, said the president was including the cost of renovating a separate Fed building, known as the Martin building, that was finished five years ago. The visit represented a significant ratcheting up of the president's pressure on Powell to lower borrowing costs, which Trump says would accelerate economic growth and reduce the government's interest payments. Presidents rarely visit the Fed's offices, though they are just a few blocks from the White House, an example of the central bank's independence from day-to-day politics. "We have to get the interest rates down," Trump said later after a short tour, addressing the cameras this time without Powell. "People are pretty much unable to buy houses." Trump is likely to be disappointed next week, however, when Fed officials will meet to decide its next steps on interest rates. Powell and other officials have signaled they will likely keep their key rate unchanged at about 4.3%. However, economists and Wall Street investors expect the Fed may start cutting rates in September. The Federal Reserve sets a short-term interest rate that influences other borrowing costs, such as mortgages, auto loans and credit card rates. Yet the Fed doesn't directly control those other rates, which are ultimately set in financial markets. Last September, when the Fed cut its rate a half-point, mortgage rates actually rose in response. Trump did step back a bit from some of his recent threats to fire Powell before his term ends May 26. Asked if the rising costs of the Fed's renovation, estimated in 2022 to cost $1.9 billion, was a "fireable offense," Trump said, "I don't want to put this in that category." "To do that is a big move, and I don't think that's necessary," Trump added. "I just want to see one thing happen, very simple: Interest rates come down." And on his Truth Social site, Trump said, "The cost overruns are substantial but, on the positive side, our Country is doing very well and can afford just about anything -- Even the cost of this building!" The Fed allowed reporters to tour the building before the visit by Trump, who, in his real estate career, bragged about his own lavish spending on architectural accoutrements that gave a Versailles-like golden flair to his buildings. Journalists get rare tour of Fed renovation On Thursday, reporters wound through cement mixers, front loaders and plastic pipes as they got a close-up view of the active construction site that encompasses the Fed's historic headquarters, known as the Marriner S. Eccles building, and a second building across 20th Street in Washington. Fed staff, who declined to be identified, said that greater security requirements, rising materials costs and tariffs, and the need to comply with historic preservation measures drove up the cost of the project, which was budgeted in 2022 at $1.9 billion. Trump in 2018 imposed a 25% duty on steel and 10% on aluminum. He increased them this year to 50%. Steel prices are up about 60% since the plans were approved, while construction materials costs overall are up about 50%, according to government data. The staff pointed out new blast-resistant windows and seismic walls that were needed to comply with modern building codes and security standards set out by the Department of Homeland Security. The Fed has to build with the highest level of security in mind, Fed staff said, including something called "progressive collapse," in which only parts of the building would fall if hit with explosives. Sensitivity to the president's pending visit among Fed staff was high during the tour. Reporters were ushered into a small room outside the Fed's boardroom, where 19 officials meet eight times a year to decide whether to change short-term interest rates. The room, which will have a security booth, is oval-shaped, and someone had written "oval office" on plywood walls. The Fed staff downplayed the inscription as a joke. When reporters returned to the room later, it had been painted over. During the tour, Fed staff also showed the elevator shaft that congressional critics have said is for "VIPs" only. Powell has since said it will be open to all Fed staff. The renovation includes an 18-inch (45-cm) extension so the elevator reaches a slightly elevated area that is now accessible only by steps or a ramp. A planning document that said the elevator will only be for the Fed's seven governors was erroneous and later amended, staff said. Renovations have been in the works for a while Plans for the renovation were first approved by the Fed's governing board in 2017. The project then wended its way through several local commissions for approval, at least one of which, the Commission for Fine Arts, included several Trump appointees. The commission pushed for more marble in the second of the two buildings the Fed is renovating, known as 1951 Constitution Avenue, specifically in a mostly glass extension that some of Trump's appointees derided as a "glass box." Fed staff also pointed to the complication of historic renovations -- both buildings have significant preservation needs. Constructing a new building on an empty site would have been cheaper, they said. As one example, the staff pointed reporters to where they had excavated beneath the Eccles building to add a floor of mechanical rooms, storage space and some offices. The Fed staff acknowledged such structural additions underground are expensive, but said it was done to avoid adding HVAC equipment and other mechanics on the roof, which is historic. Trump, who said after his tour that "it feels very good to be back on a construction site," added that opening up a basement is "the most expensive place to build." The Fed has previously attributed much of the project's cost to underground construction. It is also adding three underground levels of parking for its second building. Initially the central bank proposed building more above ground, but ran into Washington, D.C.'s height restrictions, forcing more underground construction.
Yomiuri Shimbun
6 hours ago
- Yomiuri Shimbun
Trump and Powell Bicker over Fed Building Renovations as President Ratchets up Pressure Campaign
WASHINGTON (AP) — After months of criticizing Federal Reserve Chair Jerome Powell, President Donald Trump took the fight to the Fed's front door on Thursday, publicly scorning the central bank chief over the ballooning costs of a long-planned building project. Powell pushed back, challenging the president's latest price tag as incorrect. Wearing hard hats and grim faces, standing in the middle of the construction project, Trump and Powell addressed the assembled TV cameras. Trump charged that the renovation would cost $3.1 billion, much higher than the Fed's $2.5 billion figure. Powell, standing next to him, shook his head. The Fed chair, after looking at a paper presented to him by Trump, said the president was including the cost of renovating a separate Fed building, known as the Martin building, that was finished five years ago. The visit represented a significant ratcheting up of the president's pressure on Powell to lower borrowing costs, which Trump says would accelerate economic growth and reduce the government's interest payments. Presidents rarely visit the Fed's offices, though they are just a few blocks from the White House, an example of the central bank's independence from day-to-day politics. 'We have to get the interest rates down,' Trump said later after a short tour, addressing the cameras this time without Powell. 'People are pretty much unable to buy houses.' Trump is likely to be disappointed next week, however, when Fed officials will meet to decide its next steps on interest rates. Powell and other officials have signaled they will likely keep their key rate unchanged at about 4.3%. However, economists and Wall Street investors expect the Fed may start cutting rates in September. The Federal Reserve sets a short-term interest rate that influences other borrowing costs, such as mortgages, auto loans and credit card rates. Yet the Fed doesn't directly control those other rates, which are ultimately set in financial markets. Last September, when the Fed cut its rate a half-point, mortgage rates actually rose in response. Trump did step back a bit from some of his recent threats to fire Powell before his term ends May 26. Asked if the rising costs of the Fed's renovation, estimated in 2022 to cost $1.9 billion, was a 'fireable offense,' Trump said, 'I don't want to put this in that category.' 'To do that is a big move, and I don't think that's necessary,' Trump added. 'I just want to see one thing happen, very simple: Interest rates come down.' And on his Truth Social site, Trump said, 'The cost overruns are substantial but, on the positive side, our Country is doing very well and can afford just about anything — Even the cost of this building!' The Fed allowed reporters to tour the building before the visit by Trump, who, in his real estate career, bragged about his own lavish spending on architectural accoutrements that gave a Versailles-like golden flair to his buildings. Journalists get rare tour of Fed renovation On Thursday, reporters wound through cement mixers, front loaders and plastic pipes as they got a close-up view of the active construction site that encompasses the Fed's historic headquarters, known as the Marriner S. Eccles building, and a second building across 20th Street in Washington. Fed staff, who declined to be identified, said that greater security requirements, rising materials costs and tariffs, and the need to comply with historic preservation measures drove up the cost of the project, which was budgeted in 2022 at $1.9 billion. Trump in 2018 imposed a 25% duty on steel and 10% on aluminum. He increased them this year to 50%. Steel prices are up about 60% since the plans were approved, while construction materials costs overall are up about 50%, according to government data. The staff pointed out new blast-resistant windows and seismic walls that were needed to comply with modern building codes and security standards set out by the Department of Homeland Security. The Fed has to build with the highest level of security in mind, Fed staff said, including something called 'progressive collapse,' in which only parts of the building would fall if hit with explosives. Sensitivity to the president's pending visit among Fed staff was high during the tour. Reporters were ushered into a small room outside the Fed's boardroom, where 19 officials meet eight times a year to decide whether to change short-term interest rates. The room, which will have a security booth, is oval-shaped, and someone had written 'oval office' on plywood walls. The Fed staff downplayed the inscription as a joke. When reporters returned to the room later, it had been painted over. During the tour, Fed staff also showed the elevator shaft that congressional critics have said is for 'VIPs' only. Powell has since said it will be open to all Fed staff. The renovation includes an 18-inch (45-cm) extension so the elevator reaches a slightly elevated area that is now accessible only by steps or a ramp. A planning document that said the elevator will only be for the Fed's seven governors was erroneous and later amended, staff said. Renovations have been in the works for a while Plans for the renovation were first approved by the Fed's governing board in 2017. The project then wended its way through several local commissions for approval, at least one of which, the Commission for Fine Arts, included several Trump appointees. The commission pushed for more marble in the second of the two buildings the Fed is renovating, known as 1951 Constitution Avenue, specifically in a mostly glass extension that some of Trump's appointees derided as a 'glass box.' Fed staff also pointed to the complication of historic renovations — both buildings have significant preservation needs. Constructing a new building on an empty site would have been cheaper, they said. As one example, the staff pointed reporters to where they had excavated beneath the Eccles building to add a floor of mechanical rooms, storage space and some offices. The Fed staff acknowledged such structural additions underground are expensive, but said it was done to avoid adding HVAC equipment and other mechanics on the roof, which is historic. Trump, who said after his tour that 'it feels very good to be back on a construction site,' added that opening up a basement is 'the most expensive place to build.' The Fed has previously attributed much of the project's cost to underground construction. It is also adding three underground levels of parking for its second building. Initially the central bank proposed building more above ground, but ran into Washington, D.C.'s height restrictions, forcing more underground construction.
Nikkei Asia
8 hours ago
- Nikkei Asia
Trump presses Powell to cut rates during tense visit to Fed
WASHINGTON (Reuters) -- President Donald Trump locked horns with Federal Reserve Chair Jerome Powell during a rare presidential visit to the U.S. central bank on Thursday, criticizing the cost of renovating two historical buildings at its headquarters and pressing the case for lower interest rates. Trump, who called Powell a "numbskull" earlier this week for failing to heed the White House's demand for a large reduction in borrowing costs, wrapped up his visit to the Fed's $2.5 billion building project in Washington by saying he did not intend to fire Powell, as he has frequently suggested he would. "To do so is a big move and I just don't think it's necessary," Trump told reporters after the visit. In a post on his Truth Social media site, Trump later said of the renovation, "it is what it is and, hopefully, it will be finished ASAP. The cost overruns are substantial but, on the positive side, our Country is doing very well and can afford just about anything." The visibly tense interaction at the Fed's massive construction site marked an escalation of White House pressure on the central bank and Trump's efforts to get Powell to "do the right thing" on rates. It happened less than a week before the central bank's 19 policymakers are due to gather for a two-day rate-setting meeting, where they are widely expected to leave their benchmark interest rate in the 4.25%-4.5% range. The president has repeatedly demanded that Powell slash rates by 3 percentage points or more. "I'd love him to lower interest rates," Trump said as he wrapped up the tour, as Powell stood by, his face expressionless. Powell typically spends the Thursday afternoon before a rate-setting meeting doing back-to-back calls with Fed bank presidents as part of his preparations for the session. His encounter with the president became heated as Trump told reporters the project was now estimated to cost $3.1 billion. "I am not aware of that," Powell said, shaking his head. Trump handed him a piece of paper, which Powell examined. "You just added in a third building," the Fed chief said, noting that the Martin Building had been completed five years ago. White House budget director Russell Vought and Trump's deputy chief of staff, James Blair, who have spearheaded criticism of the renovation as overly costly and ostentatious, later told reporters they still have questions about the project. The two men, who joined Trump during the visit, have suggested poor oversight and potential fraud in connection with it. Senate Banking Committee Chair Tim Scott, a Republican who sent Powell a letter on Wednesday demanding answers to his own questions about the renovation, also took part in the visit. Elevated by Trump to the top Fed job in 2018 and then reappointed by former President Joe Biden four years later, Powell last met with the current president in March when Trump summoned him to the White House to press him to lower rates. The visit on Thursday took place as Trump battles to deflect attention from a political crisis over his administration's refusal to release files related to convicted sex offender Jeffrey Epstein, reversing a campaign promise. Epstein died in 2019. The Fed, in letters to Vought and lawmakers backed up by documents posted on its website, said the project -- the first full rehab of the two buildings since they were built nearly a century ago -- ran into unexpected challenges, including toxic materials abatement and higher-than-estimated costs for materials and labor. Speaking outside of the construction site, Trump said there was "no tension" at his meeting with Powell and that they had a productive conversation about rates. Ahead of Trump's visit, Fed staff escorted a small group of reporters around the two construction sites. They wove around cement mixers and construction machines, and spoke over the sound of drills, banging and saws. Fed staff pointed out security features, including blast-resistant windows, that they said were a significant driver of costs in addition to tariffs and escalations in material and labor costs. The project started in mid-2022 and is on track to be completed by 2027, with the move-in planned for March 2028. A visit to the roof of the Eccles Building, a point of particular scrutiny by critics like Scott, who has complained about "rooftop garden terraces," revealed an impressive view of the Lincoln Memorial and the National Mall, according to the pool report. Staff explained that rooftop seating, although inexpensive, had been removed because of the appearance of it being an amenity and was one of only two deviations from the original plan. The other was the scrapping of a couple of planned fountains. Market reaction to Trump's visit was subdued. The yield on benchmark 10-year Treasury bonds ticked higher after data showed new jobless claims dropped in the most recent week, signaling a stable labor market not in need of support from a Fed rate cut. The S&P 500 equities index closed largely flat on the day. Trump's criticism of Powell and flirtation with firing him have previously upset financial markets and threatened a key underpinning of the global financial system -- that central banks are independent and free from political meddling. His trip contrasts with a handful of other documented presidential visits to the Fed. Then-President Franklin Delano Roosevelt visited the central bank in 1937 to dedicate the newly built headquarters, one of the two buildings now being renovated. Most recently, former President George W. Bush went there in 2006 to attend the swearing-in of Ben Bernanke as Fed chief.
