Bessent steps up criticism of Fed as auditions for chair intensify

WASHINGTON - It is an unwritten rule that Treasury secretaries avoid interfering with the workings of the Federal Reserve. The Fed is an independent institution, one that most policymakers believe benefits the economy by being shielded from the winds of politics.

President Donald Trump has made it clear that he does not subscribe to that view. He has openly mused about replacing Jerome Powell - whom he handpicked as the Fed's chair during his first term - with someone who will do his bidding and lower interest rates.

As a result, auditioning for the job has begun in earnest, and Treasury Secretary Scott Bessent, who is among several contenders even as he leads the search process, has shown a new willingness to deliver broadsides against the policies of the central bank.

Bessent has said he likes the Treasury role and will do whatever job Trump wants. But in recent weeks he has signaled that, if he led the Fed, he would push for the lower borrowing costs that Trump has been demanding.

In public appearances, he has echoed the president's complaints that the Fed has been too slow to cut interest rates and has said its officials are misunderstanding the impact that tariffs will have on prices. Its policymakers have broadly argued that levies of the kind Trump has put in place or threatened will raise consumer prices while slowing the country's economic growth.

"I guess this tariff derangement syndrome happens even over at the Fed," Bessent said on "The Ingraham Angle" on Fox News this month.

Bessent tends to frame his criticism of the Fed as hindsight, insisting that he will only comment on mistakes it has made in the past and not weigh in on future decisions. In an interview on CNBC last week, however, the Treasury secretary took issue with the most recent economic projections by the central bank's officials and suggested that it was being political.

"There seems to be a big dispersion in the so-called dot plot, the summary of economic projections, between the Trump appointees and the non-Trump appointees," Bessent said. "I'll let you read into that what you want."

Four times a year, the Fed releases an updated set of projections that show not only how policymakers expect the economic backdrop to evolve but also where they anticipate interest rates are headed over the next couple of years. The most recent release showed a very divided Fed, with a majority of officials expecting half a percentage point's worth of cuts this year and another large cohort forecasting steady interest rates over that period.

More recently, two Trump-appointed Fed governors - Christopher Waller and Michelle Bowman - have made the case for rate cuts as early as this month. Both said such cuts should happen as long as inflation stayed tame, a more accelerated timeline than the approach endorsed by other Fed officials, who have argued that there is no urgency to reduce borrowing costs at the moment.

Bessent's comments could complicate matters if he is nominated and confirmed by the Senate to be chair of the Fed. He would need to earn the support of the Federal Open Market Committee, the central bank's 12-person policy-setting committee, whose judgment he has openly criticized in his role as Treasury secretary.

But that could be a challenge given Trump's insistence that his replacement for Powell, whose term ends in May, must back interest rate cuts.

"If you make the criteria for getting selected loyalty, then almost anybody that comes in is going to have that stain," said Blake Gwinn, head of U.S. rates strategy at RBC Capital Markets. That, he warned, risks creating a difficult balancing act for the next chair, who may have to prove that loyalty while also "proving to the rest of the committee that they can support you."