Bessent says Powell doesn’t need to resign but should conduct internal review

Treasury Secretary Scott Bessent on Tuesday asserted that Federal Reserve Chair Jerome Powell does not need to resign though also he also repeated his desire for a review of the central bank’s operations.

A day after calling on CNBC for an examination of the Fed’s “entire” operation, Bessent said that doesn’t mean the central bank leader should step down. President Donald Trump, conversely, has said he hopes Powell quits and has pondered removing him.

“I know Chair Powell. There’s nothing that tells me that he should step down right now. He’s been a good public servant,” Bessent said on Fox Business. “His term ends in May. If he wants to see that through, I think he should. If he wants to leave early, I think he should.”

There have been no indications from Powell that he plans to step down despite a barrage of criticism from the Trump administration.

Most recently, White House officials have zeroed in on the Fed’s $2.5 billion building renovation project that has included significant cost overruns.

Bessent said his desire for a review of Fed operations should come internally, with monetary policy and the setting of interest rates “off to the side” and in a “jewel box” away from political influence.

“Everything else that the Fed has done over the years has just grown and grown and grown, and this is what happens when you don’t have oversight,” he said.

For Powell, leading an internal review would be “a real chance here for him, for his legacy, to be that he right-sized the non-monetary policy functions of the Fed,” Bessent added.

Trump has demanded that the Fed lower interest rates dramatically, though the rate-setting Federal Open Market Committee at its policy meeting next week is again expected to stay on hold. Powell and most of his colleagues have indicated they want to wait to see the impact that Trump’s tariffs are having on inflation before taking any further steps.

In a CNBC interview Tuesday, Fed Governor Michelle Bowman, who has hinted she would favor at cut at this month’s meeting, supported the notion of Fed independence but also stressed the need for accountability.

“It’s very important, and I’ve said this a number of times in the past, that we maintain our independence with respect to monetary policy,” she said during a “Squawk Box” interview. “But we also, as a part of that independence, have an obligation for transparency and accountability as well.”

Markets overwhelmingly expect the Fed keep its short-term borrowing rate locked in a range between 4.25%-4.5%, but are leaning toward the likelihood of a cut in September, according to CME Group futures data.