Speaking from Washington, Bessent likened the proposed investigation to safety reviews in other major agencies, such as the Federal Aviation Administration. “What we need to do is examine the entire Federal Reserve institution and whether they have been successful,” Bessent told CNBC’s “Squawk Box.” “Has the organization succeeded in its mission? If this were the [Federal Aviation Administration] and we were having this many mistakes, we would go back and look at why has this happened.”

Bessent also accused the Federal Reserve of “fear-mongering” over President Trump’s sharp tariffs on imported goods, noting: “There was fearmongering over tariffs, and thus far, we have seen very little, if any, inflation. We’ve had great inflation numbers,” he said, referencing the latest data showing annual inflation measured at 2.7% in June, although inflation did creep slightly higher than expected in June, to its highest level since February. Still, inflation has widely not materialized as much as economists and the Fed have warned, and economists have been working to solve the $100 billion mystery. Morgan Stanley has described the tariffs as a developing “mosaic” with “idiosyncratic” effects on the economy, poised to generate $2.7 trillion over the next decade.

He lamented what he sees as an intellectual rigidity at the central bank, criticizing how they are unable to “break out of a certain mindset,” adding, “all these PhDs over there—I don’t know what they do,” Bessent remarked, expressing frustration at the economists steering the institution’s decisions.

The pressure campaign

Bessent’s demand for an inquiry comes amid growing discord between the Trump administration and Fed Chair Jerome Powell, with many Trump officials openly criticizing Powell after Trump began posting on social media at his frustration over Powell’s refusal to cut interest rates as he has consistently cited the risk of inflation running out of control if he does so. The President has pressed the central bank to lower interest rates, arguing that hesitancy has cost the economy “hundreds of billions of dollars.” Jeffrey Roach, chief economist at LPL Financial, told Fortune that cutting rates down to 1%, as Trump says he wants, would be a “ludicrous” outcome.

While Trump recently tamped down speculation about removing Powell, Bessent declined to comment on whether he had directly advised against the move, emphasizing instead the need to investigate the broader institution, not just its leadership. Earlier in July, Bessent was the first Trump official to confirm that a formal process was under way by the Trump White House to select Powell’s successor.

In recent weeks, officials including National Economic Director Kevin Hassett and Federal Housing Finance Authority chair Bill Pulte have criticized Powell over the Fed’s $2.5 billion renovation of its headquarters in Washington DC. Powell pushed back against these criticisms just days before Bessent’s Monday comments. Over the weeked, the Associated Press reported that the White House and Fed clashed over whether the renovation should incorporate more glass or the more expensive marble, with marble being the Trump administration’s choice, per meeting minutes. Adding to the turmoil, Republican lawmakers in Congress made a criminal referral against Powell earlier on Monday, alleging false statements to Congress about the renovation work. For his part, Powell has asked the central bank’s inspector general to review aspects of the project for transparency.

Markets and Independence

The central bank’s independence is a cornerstone of U.S. economic credibility with global markets. Some White House officials, as well as market participants, fear that escalating attacks could undermine institutional trust. Senate Majority Leader John Thune notably affirmed the market’s seeming desire and support for an independent Federal Reserve and JPMorgan Chase CEO Jamie Dimon rebutted Bessent’s remarks about a formal process to replace Powell, saying central bank independence is “absolutely critical.” The risk of losing Fed independence is widely understood to be synonymous with the U.S. economy’s wider loss of credibility, but Deutsche Bank has spelled out a scenario where, if Trump were to remove Powell before the end of his term, both the dollar and bond market could collapse.

Despite political friction, Bessent reiterated that President Trump alone will ultimately decide the future of Fed leadership. The market is responding in much the way Thune described, with stocks hitting record highs in July amid a better-than-expected jobs report and increases in both retail sales and consumer sentiment. Those combine to lead to the very thing Trump wants to end: unchanged interest rates.

For this story, Fortune used generative AI to help with an initial draft. An editor verified the accuracy of the information before publishing.