US Treasury's Bessent says Fed's language shows they are 'stuck in the past'

Washington: U.S. Treasury Secretary Scott Bessent on Thursday applauded the Federal Reserve's decision to cut interest rates by a quarter percentage point, but said comments casting doubt on another rate cut this year showed the institution needed a major revamp.

Bessent told Fox Business Channel's "Mornings with Maria" that he would carry out a second round of interviews of candidates to replace Fed Chair Jerome Powell in early December, allowing President Donald Trump to choose a replacement by Christmas.

The goal, he said, was to find a new leader for the US central bank who would overhaul the entire institution.

"The decision by the Federal Reserve yesterday - the decision to cut rates by 25 basis points, I applaud, but the language that went with it, tells me that this Fed is stuck in the past. Their inflation estimates have been terrible so far this year," he said. "Their models are broken."

Bessent said he could not understand why the Fed was signaling that it didn't want to cut rates at its December meeting, saying their estimates of gross domestic product and inflation had been "consistently wrong."

"We're going to find a leader who is going to revamp the entire institution in terms of process and inner workings," he said.

Powell told reporters on Wednesday that a policy divide within the US central bank and a lack of federal government data may put another interest rate cut out of reach this year.

The Fed on Wednesday cut interest rates by a quarter of a percentage point, as expected, as a way to temper any further weakening of the job market. But the central bank's new policy statement included several references to the lack of official data during a federal government shutdown.

Powell said policymakers are likely to become more cautious if it deprives them of further job and inflation reports.

Trump, who has been critical of Powell's leadership of the Fed since before starting his second term, on Tuesday blasted the central banker as "incompetent" during a meeting with business leaders in Tokyo.

On Monday, Bessent told reporters there were five finalists to replace Powell when his term as Fed chair ends in May: White House economic adviser Kevin Hassett, former Fed Governor Kevin Warsh, current Fed Governor Christopher Waller, Fed Vice Chair for Supervision Michelle Bowman and BlackRock executive Rick Rieder.