U.S. Treasury Secretary Scott Bessent addressed concerns over President Donald Trump’s recent comments about suing his Federal Reserve nominee, Kevin Warsh, if interest rates were not lowered. Bessent clarified that Trump’s statement, made at a Washington dinner, was intended as a joke. The remarks had sparked debate over the president’s respect for the Fed’s independence. Bessent was responding to questions raised by Senator Elizabeth Warren during a Senate Banking Committee hearing. Warren is a Democrat, while Bessent serves in the Republican Trump administration.
Bessent emphasised to CNBC that Trump ‘has great respect for the Fed, for the Fed’s independence.’ He also referenced a separate quip made by the president about Senator Warren, drawing parallels to show the jocular nature of Trump’s comments. The Treasury Secretary had previously declined to confirm whether the Trump administration would refrain from suing Warsh if their monetary policies diverged.
The Treasury chief also addressed the ongoing U.S. Justice Department investigation into current Fed Chair Jerome Powell, deflecting questions about its continuation. The investigation, concerning the cost of a Fed headquarters renovation, has faced criticism from former central bank leaders and Republican members. President Powell has called the probe a ‘pretext’ to influence interest rate decisions.
Republican Senator Thom Tillis has indicated he will block Fed confirmation hearings until the legal matter concerning Powell is resolved, a stance echoed by Senate Democrats. Senator Tim Scott, who chairs the Senate Banking Committee, has expressed his belief that Powell did not break the law, although Bessent noted the sentiment among senators suggested possible incompetence. Bessent’s remarks aimed to ease concerns about potential interference in the Federal Reserve’s operations.
