Treasury Secretary Bessent calls for "entire" review of Fed

U.S. Treasury Secretary Scott Bessent on Friday called for a wide-ranging re-examination of the Federal Reserve’s role and authority, including its control over interest rate policy, as the Trump administration steps up its campaign to assert greater oversight over the central bank.

The push reflects a growing effort by the White House to scrutinise an institution long considered independent from day-to-day politics, with its autonomy seen by many economists as essential to maintaining stability and credibility in U.S. financial markets.

In a strongly worded opinion piece published in the Wall Street Journal, Bessent argued that the Fed’s powers have expanded far beyond their original mandate and require a comprehensive review. “There must also be an honest, independent, nonpartisan review of the entire institution, including monetary policy, regulation, communications, staffing and research,” he wrote. According to Bessent, the central bank should no longer oversee bank supervision, suggesting that responsibility should be transferred to other government agencies better suited to the task.

He further criticised the Fed’s use of unconventional tools such as large-scale bond purchases, contending that such actions “outside of true crisis conditions” distort markets and undermine economic efficiency. These programmes, sometimes referred to as quantitative easing, were designed to stabilise the economy during downturns but have increasingly become part of the Fed’s toolkit in periods of relative calm, raising questions about whether they fuel asset bubbles or create long-term imbalances.

Bessent’s remarks signal an intensifying debate over the future of the Federal Reserve at a time of heightened political polarisation and economic uncertainty. While advocates of central bank independence warn that political interference could weaken confidence in U.S. monetary policy and trigger instability, Trump administration officials argue that greater accountability is necessary to ensure the Fed remains focused on promoting growth and fairness in the broader economy.

The call for a sweeping review is expected to spark strong pushback from defenders of the Fed’s independence, including many on Wall Street and within Congress. Still, Bessent’s comments underscore the administration’s determination to reshape the balance of power between the Treasury and the central bank, potentially setting the stage for one of the most significant challenges to the Fed’s autonomy in decades.

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