Treasury Secretary Scott Bessent said the Federal Reserve “must change course” on monetary policy in his most public comments on the central bank since the start of President Donald Trump’s campaign to push the independent agency to lower key interest rates.
“The Fed must change course. Its standard tool kit has become too complex to manage, with uncertain theoretical underpinnings,” Bessent wrote in an op-ed published Friday in the Wall Street Journal. “Simple and measurable tools, aimed at a narrow mandate, are the clearest way to deliver better outcomes and safeguard central-bank independence over time.”
While Trump has taken to name-calling and high-pressure moves such as public call-outs and televised meetings with Fed Chair Jerome Powell, Bessent took a more measured approach.
“Repeated misses demonstrate that the Fed placed too much faith in its own abilities and in expansionary fiscal policy to spur growth,” Bessent said. “When the Trump administration shifted toward tax cuts and deregulation, the Fed’s forecasts were too pessimistic, underscoring its reliance on flawed models and neglect of supply-side effects.”
On Friday, Trump once again deployed his favorite moniker for Powell.
“Jerome ‘Too Late’ Powell should have lowered rates long ago,” Trump wrote in a Truth Social post after a poor jobs report. “As usual, he’s ‘Too Late!'”
Bessent chalked it up to mission creep after the Great Recession.
“At the heart of independence lies credibility and political legitimacy. Both have been jeopardized by the Fed’s expansion beyond its mandate. Heavy intervention has produced severe distributional outcomes, undermined credibility and threatened independence,” Bessent wrote. “Looking ahead, the Fed must scale back the distortions it causes in the economy. Unconventional policies such as quantitative easing should be used only in true emergencies, in coordination with the rest of the federal government.”
Bessent called for an overhaul: “There must also be an honest, independent, nonpartisan review of the entire institution, including monetary policy, regulation, communications, staffing and research.”
Bessent’s comments come as Trump continues to push the central bank to lower interest rates.
Trump, for the first time in U.S. history, recently fired a Federal Reserve governor for cause over allegations of mortgage fraud. That governor, Lisa Cook, is fighting back in court to hold onto her position.
In late July, the Federal Open Market Committee, which sets rates, voted to keep rates flat at 4.25% to 4.5%. Trump appointed FOMC governors Michelle Bowman and Christopher Waller wanted to cut the rate by 1/4 of a percentage point.
That vote came days after Trump personally toured an over-budget renovation project at the Federal Reserve and patted Powell on the back while telling reporters it was time to cut rates. Trump used the visit to encourage Powell to lower interest rates.
Since then, Powell has hinted that he could support rate cuts at the FOMC’s next meeting in September.
Trump also called Powell to the White House for a meeting. After that May meeting, Powell issued a rare statement saying that FMOC decisions would be based “solely on careful, objective, and non-political analysis.”
Since returning to the White House for his second term, Trump has called Powell every name in the book. One of the president’s favorites for Powell has been “numbskull.”
Powell has largely ducked Trump’s criticism. When Trump criticized cost overruns on the remodel, the Fed chairman referred the matter to the central bank’s inspector general.
Trump has wanted to fire Powell for years, but hasn’t taken action.
In July, Powell was asked at a European Central Bank conference in Portugal how Trump’s personal attacks have affected his work at the Federal Reserve.
“I’m very focused on just doing my job,” he said. “The things that matter are using our tools to achieve the goals that Congress has given us: Maximum employment, price stability, financial stability and that’s what we focus on. 100%”
