Treasury Secretary Calls for Federal Reserve Investigation Amid Trump Criticism

Treasury Secretary Scott Bessent has intensified his criticism of the Federal Reserve, calling for a comprehensive investigation into the central bank’s operations and effectiveness. In a notable interview, Bessent questioned whether the Federal Reserve has met its mandate, marking a rare public critique from the nation’s top economic official against its own central bank during a critical period for U.S. economic policy. His remarks come amidst a wave of criticism from the Trump administration directed at the Fed.

Speaking from Washington, Bessent compared the proposed investigation to safety reviews conducted in other major agencies, such as the Federal Aviation Administration. “What we need to do is examine the entire Federal Reserve institution and whether they have been successful,” Bessent stated. “Has the organization succeeded in its mission? If this were the [Federal Aviation Administration] and we were having this many mistakes, we would go back and look at why has this happened.”

Bessent also accused the Federal Reserve of “fear-mongering” over President Trump’s sharp tariffs on imported goods. He noted that despite warnings of inflation, the actual inflation rate has remained relatively low. Bessent referenced the latest data showing annual inflation measured at 2.7% in June, although inflation did slightly exceed expectations in June, reaching its highest level since February. Economists have been working to understand the tariffs' effects, which have been described as a developing “mosaic” with “idiosyncratic” impacts on the economy.

Bessent expressed frustration with what he perceives as intellectual rigidity at the central bank, criticizing the economists steering its decisions. “All these PhDs over there—I don’t know what they do,” he remarked, highlighting his dissatisfaction with the institution’s decision-making process.

Bessent’s call for an inquiry coincides with growing tension between the Trump administration and Fed Chair Jerome Powell. Many Trump officials have openly criticized Powell after the President expressed frustration over Powell’s refusal to cut interest rates, citing the risk of inflation. The President has argued that the Fed’s hesitancy has cost the economy “hundreds of billions of dollars.”

While Trump recently downplayed speculation about removing Powell, Bessent declined to comment on whether he had advised against the move. Instead, he emphasized the need to investigate the broader institution, not just its leadership. Earlier in July, Bessent was the first Trump official to confirm that a formal process was underway to select Powell’s successor.

In recent weeks, officials including National Economic Director Kevin Hassett and Federal Housing Finance Authority chair Bill Pulte have criticized Powell over the Fed’s $2.5 billion renovation of its headquarters. Powell pushed back against these criticisms just days before Bessent’s comments. Adding to the turmoil, Republican lawmakers in Congress made a criminal referral against Powell, alleging false statements to Congress about the renovation work. Powell has asked the central bank’s inspector general to review aspects of the project for transparency.

The central bank’s independence is a cornerstone of U.S. economic credibility with global markets. Some officials and market participants fear that escalating attacks could undermine institutional trust. Senate Majority Leader John Thune affirmed the market’s support for an independent Federal Reserve, while JPMorgan Chase CEO Jamie Dimon rebutted Bessent’s remarks about a formal process to replace Powell, emphasizing the critical importance of central bank independence. The risk of losing Fed independence is widely understood to be synonymous with the U.S. economy’s wider loss of credibility.

Despite political friction, Bessent reiterated that President Trump alone will ultimately decide the future of Fed leadership. The market has responded positively, with stocks hitting record highs in July amid a better-than-expected jobs report and increases in both and . Those combine to lead to the very thing Trump wants to end: unchanged interest rates.