US Treasury Secretary Bessent Says Fed Needs ‘Thorough Overhaul’, Expects Decision On Next Fed Chair in Next Couple of Days Or Weeks

• Bessent on ongoing probe on Jerome Powell said Fed should come forward in the open.  
• On the next Fed appointment, Bessent said he expects a decision from Trump either before he leaves for Davos or when he returns. 
• Former Federal Reserve Governor Kevin Warsh and National Economic Advisor Kevin Hassett are the two front-runners to become next Fed chair.

U.S. Secretary of the Treasury Scott Bessent said on Thursday that the Federal Reserve needs a ‘thorough overhaul’ during an interview on Fox Business. 

Bessent said that he has been calling for an internal investigation or an internal review of the Federal Reserve. “So perhaps we'll push that idea along,” he added.

Jerome Powell Probe

Bessent on ongoing criminal investigation on Fed chair Jerome Powell said, “I've been calling for the Fed to conduct its own internal investigation into a lot of the deficiencies that the institution has had”. 

“We have seen these calls to overruns, and I think it would just be much better if the Fed came forward and they got these issues out in the open, rather than having a tight hold. I do think we need some transparency here, because, again, that I don't know anything about construction, seemingly not many people at the Fed do,” he added. 

Powell is subject of a criminal investigation by the U.S. Department of Justice over the testimony he delivered to the committee in June regarding the central bank’s revamp of its headquarters.

Next Fed Chair

Bessent said that he expects Donald Trump to announce the next chair of the Federal Reserve in a couple of days to a couple of weeks. “I'd expected that we would have a decision either before he leaves for Davos or when he returns,” he said.

“A candidate who President Trump nominates will be confirmed quickly. I think it will be someone who is substantial, who cares about the integrity of the Fed, but cares about the dual mandate and who markets will respect,” he added. 

Donald Trump has been interviewing candidates since the last few months to replace current Fed chair Jerome Powell. Former Federal Reserve Governor Kevin Warsh and National Economic Advisor Kevin Hassett are the two front-runners to take the job. 

Trump has repeatedly said that the next chair of the Federal Reserve has to immediately cut interest rates and has said that whoever does not cut rates will not be considered for the job.

Market Reaction

U.S. equities closed nearly flat on Friday in a choppy session. The SPDR S&P 500 ETF (SPY) edged lower by 0.04%, the SPDR Dow Jones Industrial Average ETF (DIA) was nearly flat, and the Nasdaq-100 tracking Invesco QQQ Trust (QQQ) fell 0.09% during extended hours of trading. Retail sentiment around QQQ on Stocktwits remained in ‘bearish’ territory.
 

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