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Bessent reportedly told Trump that removing Powell before his term is up next spring could spur a negative reaction in the economy and financial markets, and push the central bank into uncharted legal and political territory, the Journal reported, citing people familiar with the matter.
Bessent also argued that the Fed appears poised to cut interest rates this year, making it unnecessary to remove Powell, the Journal said. The president has harshly criticized Powell in the past for not slashing short-term rates.
But Trump disputed the Journal story in a Truth Social post on Sunday, calling it “typically untruthful.”
“Nobody had to explain that to me. I know better than anybody what’s good for the Market, and what’s good for the U.S.A.,” Trump wrote.
“People don’t explain to me, I explain to them!” he added.
Bessent’s comments to Trump mark a departure from the president’s other top allies, some of whom have increased their criticisms of Powell in recent weeks.
But the carping has escalated in recent weeks, with top Trump administration officials zeroing in on the central bank’s $2.5 billion renovation project.
White House Office of Management and Budget Director Russell Vought has accused Powell of having “grossly mismanaged the Fed,” pointing to the renovation project’s cost overruns as an example.
Vought also asked Powell a series of questions about the renovation project, which Powell responded to this week.
“The Board believes it is of the utmost importance to provide transparency for our decisions and to be accountable to the public,” Powell wrote.
Removing Powell before his term is up, which would be an unprecedented move, would likely trigger a legal clash that could wind up at the U.S. Supreme Court.
Trump’s dismissal of the Journal story comes days after he sued media mogul Rupert Murdoch, after the newspaper published an article saying that Trump sent his then-friend Jeffrey Epstein a “bawdy” letter for Epstein’s 50th birthday.
Trump is seeking damages of no less than $10 billion in the lawsuit, which names Murdoch, his company News Corp and its CEO Robert Thomson, the Journal’s publisher, Dow Jones & Co., and the two reporters who wrote the article as defendants.
The Treasury Department and the White House did not respond to CNBC’s request for comment.
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