(Yahoo! Finance) - Trump Treasury secretary pick Scott Bessent told Senate lawmakers Thursday that the Federal Reserve should remain independent, but that Trump "is going to make his views known" as president.
"Of course," he said in response to a question about whether the central bank should remain independent from the president.
"I think on monetary policy decisions, the FOMC should be independent,” he later added during his confirmation hearing, referring to the Fed body known as the Federal Open Market Committee that votes on whether to raise or lower interest rates.
Bessent last year suggested in an interview that Trump could appoint a "shadow chair" to undermine the influence of Fed Chair Jerome Powell. He did not discuss such an idea Thursday.
The relationship between the incoming president and the central bank will be under an extreme spotlight in 2025, as some expect the two to collide if inflation ramps back up and the Fed is forced to pull back expectations for rate cuts.
Tensions between Trump and Powell were on display for much of 2024. On the campaign trail, Trump regularly weighed in with criticisms of Powell, saying he wanted input and that Powell has "gotten it wrong a lot."
"I feel the president should have at least say in there, yeah, I feel that strongly," he said in August during a news conference.
But Bessent said Thursday that the idea that the president-elect believes he should have influence over Fed policymaking by being in the room is "highly inaccurate" — referencing a media report from the Wall Street Journal.
At the same time, Bessent said that Trump "is going to make his views known."
As recently as a Jan. 7 press conference, Trump did just that — saying "inflation is still raging, and interest rates are far too high."
Powell and his colleagues said in December that they expect inflation to remain more elevated than previously thought — predicting it will end 2025 at 2.5% instead of a prior forecast of 2.2%. That revision caused the central bank to scale back the number of rate cuts it expects to make this year to two from four previously.
If Trump’s proposed policies, from tariffs to tax cuts, cause more inflation, that could force the Fed to pull back even more on any easing — or even consider rate hikes.
That likely wouldn’t make Trump happy. During his first term, then-President Trump attacked Powell with regularity (even though it was Trump who had elevated him to his current role) for not lowering rates far enough, even once suggesting negative interest rates.
Trump also wasn’t afraid to talk about firing Powell, saying bluntly in a 2020 news conference that "I have the right to remove" him.
The then-president added that he could also demote Powell from his position as chair, "put him in a regular position, and put somebody else in charge."
Powell acknowledged last month his past public clashes with Trump, noting the tone remained consistent in private discussions.
"The president said the same things to me privately as he said publicly," Powell said on Dec. 4.
But Powell said he is "not concerned" that the central bank could lose its independence during a new Trump administration.
Powell has argued the Fed was created by Congress to be independent so it can make decisions for the benefit of Americans and not a particular political party. He has said there is "very broad support” for that concept from both Republicans and Democrats.
The president-elect said last month on NBC's Meet the Press that he has no plans to remove Powell before the Federal Reserve chair's term is up in May 2026.
"I don’t see it," he said.
Bessent has also committed recently to a full term for Powell. He told CNBC in December that Powell could serve out his full term as he moved between confirmation meetings. Powell's full term as a member of the Fed's board of governors doesn't end until 2028, but his time atop the Fed as chair ends sooner, in 2026.
At about the same time, Powell said that he hoped for a good relationship with the incoming Trump White House and Trump’s nominee for Treasury secretary.
"I fully expect that we’ll have the same general kinds of relationships, institutional relationships, for example with the Council of Economic Advisers, but most importantly with the Treasury Department," Powell said Wednesday at the New York Times DealBook Summit in New York.
