Treasury Secretary Scott Bessent has lent his support to Jerome Powell amid regular attacks from Trump administration officials, saying he sees no reason for the Federal Reserve chairman to resign.

"Nobody is telling me he should resign now," Bessent said of the US central bank chief, speaking Tuesday on Fox Business. "His term ends in May. If he wants to continue, I think he should. If he wants to leave early, I think he should."

Powell has been criticized by President Donald Trump for months for leading the Fed on hold, refusing to continue rate cuts last year due to concerns about the inflationary impact of government tariff hikes.

Several Republicans this month also took issue with the chairman over the costly renovation of the central bank building. Trump on Tuesday reiterated his criticism, saying Powell had "done a terrible job, but he'll be out in eight months." The president emphasized his belief that the Fed's benchmark interest rate should be 3 percentage points lower.

Bessent, at the same Oval Office event, said that "based on the way they cut rates last fall, they should be cutting rates now." The Treasury chief on Monday called for an internal review of the Fed's non-monetary activities, including renovation projects. "The Fed has undergone a major mission upgrade, and that's where the bulk of the spending is going," he said at the White House on Tuesday.

For Powell, "there's a real opportunity here for him, for his legacy—that he'll adjust the Fed's non-monetary policy functions," Bessent said on Fox Business. The Treasury chief reiterated his view that, for monetary policy, "we should put it aside—it should be like a jewel box."

Regarding other initiatives, the central bank "continues to grow and expand. And this is what happens when you have no oversight—they're not subject to budgetary appropriations," Bessent said. "They're just printing money to spend it. And I think a thorough review is in order."

Since the Great Financial Crisis, the Fed "has implemented what I call a gain-of-function monetary policy, and spending has increased considerably," Bessent said. At the Treasury Department, by contrast, spending was cut by about 17% last year, he said.

Trump, when asked last week if he had ruled out firing Powell, replied, "I'm not ruling anything out, but I think it's very unlikely—unless he has to go because of fraud. I mean, there may be fraud involved" with the building renovations. The president's housing finance chief, Bill Pulte, has alleged, without providing details, that Powell's testimony about the renovations was "fraudulent."

Powell said in a letter to Trump's budget director, Russ Vought, last week that "we take seriously the responsibility to be good stewards of public resources as we fulfill the duties given to us by Congress on behalf of the American people." He answered questions from Vought about the $2.5 billion renovation project.

White House Deputy Chief of Staff James Blair said that Trump administration officials would visit Fed headquarters on Thursday for a site visit related to the renovations.

Powell's term as Fed chairman ends in May, although his separate term as Fed governor runs through January 2028. He has declined to specify whether he will leave the central bank entirely when his term ends. Bessent hinted last week that he may take that step. (alg)

Source: Bloomberg