US Treasury again underscores support for a strong dollar

Bessent publicly criticizes the Fed at hearing

"Let inflation fester for 49 years, lost credibility"

Scott Bessent, the US Treasury Secretary, publicly criticized the Federal Reserve (Fed), saying it has "lost the public’s trust due to the headquarters renovation issue and the surge in prices." He also reiterated his commitment to a strong-dollar policy.

At a hearing of the House Financial Services Committee on the 4th (local time), when asked for his views on the Fed’s independence, Secretary Bessent said, "I believe in the Fed’s independence as well as its accountability," adding, "When the Fed allowed the most severe inflation in 49 years to fester and devastated this country’s workers, it lost the trust of the American people, and that independence came under threat."

Asked whether US President Donald Trump has the authority to dismiss the Fed chair or governors, he said, "I’m not a lawyer," and avoided a direct answer. He argued, however, that the president has the right to express his views on monetary policy, defending Trump amid controversy over interference with the Fed.

That day, Secretary Bessent reaffirmed his previous stance denying foreign-exchange market intervention. In response to a question about the exchange rate, he said, "I always support a strong-dollar policy." And when presented with a record showing that in January 2024 Key Square, the hedge fund he runs, said in a letter that "tariffs cause inflation," he replied, "I no longer believe that."

Foreign media pointed out that Bessent’s remarks are further stoking concerns about encroachment on the Fed’s independence. According to Bloomberg, Democratic Rep. Gregory Meeks (New York) said at the hearing, "Secretary Bessent is acting like President Trump’s lackey."

Meanwhile, the Senate confirmation process for Kevin Warsh, the Fed chair nominee, is also expected to face headwinds. The Senate Banking Committee, which handles the confirmation, consists of 13 Republicans and 11 Democrats, and Republican Sen. Thom Tillis is opposing the start of the process.

In an NBC News interview that day, President Trump said, "If he (Warsh) had come in and said he wanted to raise rates, he wouldn’t have gotten the chairmanship," underscoring that he remains firm in his push for rate cuts.

Reporter Han Kyung-jae hankyung@hankyung.com