Treasury Secretary Scott Bessent said on Wednesday that the Federal Reserve needs more accountability after failing the American public by allowing inflation to soar in recent years.
The comments, made during a House Financial Services Committee hearing, come after President Trump said he would nominate Kevin M. Warsh to be the next chair of the Federal Reserve after a year of public griping about the central bank’s interest rate policies.
Mr. Bessent said that while he respected the Fed’s independence, he believed it had lost credibility under its current leadership as a result of rising prices and a costly renovation of its headquarters. The Trump administration recently opened a rare criminal investigation into the central bank’s chair, Jerome H. Powell, over his handling of the renovation.
“The independence of the Fed is based on its trust of the American people,” Mr. Bessent said. “The Federal Reserve lost the trust of the American people when it allowed the greatest inflation in 49 years to ravage — ravage — the working people of this county.”
The Treasury secretary also lamented that the central bank, whose structure was established in the Federal Reserve Act of 1913, is not funded through congressional appropriations, suggesting that it runs on “magic money” that it prints itself. The Fed is primarily funded by fees paid by financial institutions and interest earned on U.S. government securities that it holds.
Mr. Trump has repeatedly threatened the Fed’s independence over the past year, frustrated that the central bank has not lowered interest rates more aggressively. In addition to the Justice Department’s criminal investigation of Mr. Powell, Mr. Trump has attempted to fire Lisa D. Cook, a Fed board governor. That case is currently before the Supreme Court.
Mr. Bessent demurred on Wednesday when asked if Mr. Trump had the authority to fire a Fed governor or chair, explaining that he is “not a lawyer.” The Treasury secretary did say that he believes Mr. Trump has the right to express his views about monetary policy.
The fate of Mr. Warsh’s nomination is in limbo in the Senate, where Senator Thom Tillis, a Republican from North Carolina who sits on the powerful Senate Banking Committee, has said he will hold up the process of confirming the new chair until the Trump administration resolves the legal inquiry.
Senator Tim Scott, a South Carolina Republican and the chairman of the Banking Committee, said on Fox Business on Wednesday that he thought Mr. Tillis would ultimately vote to support Mr. Warsh. He also said that he did not think Mr. Powell had broken any laws. The U.S. attorney in Washington is investigating whether Mr. Powell lied to Congress about the scope of the renovations during testimony last year.
“I believe what he did was made a gross error in judgment,” Mr. Scott said of Mr. Powell, referring to his remarks about the renovation. “He was not prepared for that hearing. I do not believe that he committed a crime during the hearing.”
Officials regularly testify before Congress, but their misstatements rarely lead to criminal investigations.
At the hearing on Wednesday, Mr. Bessent denied writing in a 2024 letter to investors in his hedge fund that “tariffs are inflationary and would strengthen the dollar.” When presented with the direct quote later in the hearing, Mr. Bessent corrected himself and said that he no longer believed that tariffs cause inflation, which he had written was “hardly a good starting point for a U.S. industrial renaissance.”
Alan Rappeport is an economic policy reporter for The Times, based in Washington. He covers the Treasury Department and writes about taxes, trade and fiscal matters.
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