Bessent calls Fed’s 2022 move a failure

A replacement for Fed Chair Jerome Powell is on the way, and it’s coming sooner than expected. Scott Bessent, speaking in an interview with Bloomberg, said the Trump administration will begin working on naming a successor “over the coming weeks and months.”

He confirmed that a 14-year seat opens in January, and that seat could go to someone who’ll eventually take Powell’s place when his term ends in May 2026. 

“We could appoint the new chair in May, or have them come in through the seat that opens in January,” Scott said. “I don’t see why there would be confusion.” He also made clear the White House is considering people already inside the Fed.

Bessent calls Fed’s 2022 move a failure, promotes stablecoins as treasury buyers

Scott took a direct jab at Powell’s Fed when asked about current rate policy.

“They made a gigantic mistake in 2022,” he said. “And like people who fall and then stare at their feet, the Fed is now stuck looking down.” 

He said inflation from tariffs doesn’t exist, and even if it does show up, “it would be a one-time price adjustment.” He said the Fed’s team “failed the American people in 2022” and is now frozen “at the wheel.”

Scott didn’t say if he personally wants the job. “I will do what the president wants,” he told Bloomberg. “But I think I have the best job in D.C.” He didn’t deny the possibility either, and the discussion came just as the Senate began voting on the GOP’s major tax and spending plan. That bill, called the “big, beautiful bill,” is expected to reach Trump’s desk by July 4.

Asked if the plan would reduce the deficit over the next decade, Scott said the key isn’t the amount but the trajectory. “We’re focused on debt-to-GDP and deficit-to-GDP,” he said. “We’ll be turning both of those down over the next year.”

Bessent addresses tariff deadline, inflation, and crypto legislation

On trade, Scott said July 9 is the deadline for locking in deals with 18 key partners. He wouldn’t name countries but said negotiators from the Treasury, Commerce, and USTR are seeing offers “they can’t believe.” 

He described the talks as a full-court press to cut tariffs, remove non-tariff barriers, and keep the pressure on nations that are “being recalcitrant.” If deals fall through, April 2 tariffs will come back. “That’s up to President Trump,” Scott said.

Asked about the lumber tariffs under Section 232, which impact housing, he said those take longer to process and weren’t part of the reciprocal talks. As for Fannie Mae and Freddie Mac, he confirmed the plan is to privatize them, but only after the peace, trade, and tax deals are finished. “We’ll make sure mortgage spreads don’t move,” he said, offering no date.

Crypto wasn’t left out. Scott confirmed that the Genius Act, the Stablecoin bill, has passed the Senate and is now in the House. “We’re pushing them to pass it as is,” he said. He wants it done by mid-July, saying stablecoins will provide a new payment rail and become a key player in the Treasury market.

“Would you rather have a private stablecoin backed by US Treasuries with US best practice regulation,” he asked, “or an ECB coin that can be shut off?” He answered his own question: “Everyone will choose the US private sector with US regulation all day, every day.”

When pressed on the CBO’s 1.8% growth forecast, he dismissed it as wrong. “Maybe that applies under Democrat governments,” he said. “But this plan brings back 100% expensing and deregulation. We saw what happened in Trump 1.0—we can do it again.”

Scott said now isn’t the right time to issue longer-dated bonds. “We’re more than one standard deviation above the long-term rate,” he explained. “Why would we do that now?” He pointed out that 2021 or 2022 would’ve been the better time to lock in those rates. But he also noted that the ten-year yield has already fallen by almost half a percentage point since January.

He expects it to fall further. “Inflation is very, very tame,” he said. “I’m not going to comment on Fed policy, but I am focused on the ten-year.” He thinks the whole yield curve could shift lower if inflation keeps dropping. And when told that other global markets have rising rates while the US does not, he shot back: “The US is the only major bond market where ten-year rates are lower than any other country.”

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