The American Minister of Finance, Scott Bessent, has called for a complete revision of the Federal Reserve. According to Bessent, not only recent controversies, such as the renovation of FED buildings,, but at the entire functioning of the central bank, should be considered. His statements follow on an increased tension between the White House and the Fed.
Full research into functioning Fed
In an interview with CNBC, Bessent stated that the FED must be blocked structurally. “We have to see if the Federal Reserve as an institution has been successful in its mission. If this was the aviation authority with so many mistakes, we would also intervene,” said Bessent.
His criticism focuses, among other things, on the attitude of the FED towards inflation and the response to Trump’s trade rates policy. “They were scareing about the rates, but we have hardly seen any inflation,” he said. “What do all those economists actually do there?”
Tensions around FED chairman Powell
The comments come at a time of increasing pressure on FED chairman Jerome Powell. Last week reports that President Donald Trump was considering dismissing Powell, although he later denied that. Trump repeatedly criticizes the Fed because it refuses to drastically lower interest rates, despite weakening inflation.
Bessent would have advised internally against a premature dismissal of Powell, but confirmed that the final decision lies with Trump. “The president asks a lot of opinions and then makes a decision,” said Bessent.
Senator Elizabeth Warren recently warned that Powell’s resignation could cause a crash in the markets. Powell states that he does not collapse under political pressure and only focuses on his double mandate: maximum employment and stable prices.
Criticism of renovation and trade policy
In addition to monetary policy, a renovation project of 2.5 billion dollars in FED buildings is also under fire. Trump even hinted on possible dismissal in fraud, although he did not explain further.
In the meantime, the tension between the US and the European Union on Handelsdeals. Bessent emphasizes that quality goes beyond speed during negotiations. Without agreement, a rate of 30 percent will come into effect on 1 August for European goods. Bessent: “It doesn’t have to be ugly, but there is a lot back and forth.”
With his plea for reform, Bessent explicitly positions itself in the debate about the future of the Federal Reserve. At the same time, as Trump’s confidant, he continues to play a central role in the economic policy of the US.
Source: https://newsbit.nl/bessent-wil-volledige-herziening-van-federal-reserve/
