Bessent Calls for Internal Review of Federal Reserve’s Nonmonetary Policy Operations

U.S. Treasury Secretary Scott Bessent on Monday called for an internal review of the Federal Reserve’s nonmonetary policy operations, saying that “mission creep and institutional growth” have taken the central bank into areas beyond its remit.

Bessent wrote on social media that the Federal Reserve’s conduct of monetary policy is a “jewel box” that should be “walled off to preserve its independence,” describing that independence as a “cornerstone of continued U.S. economic growth and stability.”

That autonomy is “threatened by persistent mandate creep into areas beyond its core mission, provoking justifiable criticism that unnecessarily casts a cloud over the Fed’s valuable independence on monetary policy,” he wrote on X.

Bessent said a comprehensive institutional review of the Federal Reserve would strengthen the central bank’s credibility with the American people.

Earlier on Monday, Bessent told CNBC’s “Squawk Box” that there needs to be an examination of whether the Federal Reserve has been successful.

“Has the organization succeeded in its mission?” he said. “If this were the [Federal Aviation Administration] and we were having this many mistakes, we would go back and look at why has this happened.”

The Epoch Times contacted the Federal Reserve, but the central bank declined to comment.

Fed Refurbishments

The Treasury secretary also highlighted the $2.5 billion refurbishment of the central bank’s Washington headquarters.

He said in his post on X that while he has no knowledge or opinion on the legal basis for the renovations, “a review of the decision to undertake such a project by an institution reporting operating losses of more than $100 billion per year should be conducted.”

On July 10, Office of Management and Budget Director Russell Vought wrote to Federal Reserve Chairman Jerome Powell, criticizing what he called the “ostentatious overhaul” of the central bank’s estate, a project which he said was now $700 million over budget.

The Fed justified the expense, saying on its website that “major systems” in both the Marriner S. Eccles Building and the 1951 Constitution Avenue Building are “obsolete and in need of replacement for health and safety reasons.”

The central bank noted that some of these systems date back to the buildings’ construction in the 1930s.

Interest Rates

The Federal Reserve is the United States’s central bank and conducts the nation’s monetary policy, including raising and lowering interest rates.

The central bank started raising interest rates in 2022 to curb inflation, reaching a peak of 5.5 percent in 2023. The Fed then cut rates several times last year, bringing them down to the current range of 4.25 to 4.5 percent.

President Donald Trump has repeatedly criticized Powell for the Federal Reserve’s reluctance to cut interest rates further.

“Our Fed Rate is AT LEAST 3 Points too high,” the president stated in a July 9 post on Truth Social. “[Powell] is costing the U.S. 360 Billion Dollars a Point, PER YEAR, in refinancing costs. No Inflation, COMPANIES POURING INTO AMERICA. ‘The hottest Country in the World!’ LOWER THE RATE!!!”

Former World Bank President David Malpass also weighed in on the issue earlier this month.

“The Fed has the rates too high. And the question is when are they going to cut and find an exit strategy from what they’re doing,” he told CNBC on July 2. “The Feds have created all these problems, these cycles of inflation and deflation. And I think there has to be a full remaking of their models. Trump’s trying to do that but it’s going to take time.”

Besssent told “Squawk Box” on Monday that there has been “fear mongering” over tariffs, and “thus far we have seen very little, if any, inflation.”

“We’ve had great inflation numbers,” he said.