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Treasury Secretary Scott Bessent has faced questions from the United States Senate about President Donald Trump’s ongoing campaign to slash interest rates, despite concerns that such a move could turbo-charge inflation.
Bessent appeared on Thursday before the Senate’s Financial Stability Oversight Council.
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There, he received a grilling from Democrats over rising consumer prices and concerns about Trump’s attempts to influence the Federal Reserve, the US central bank.
One of his early clashes came with Senator Elizabeth Warren, who sought answers about a report in The Wall Street Journal that indicated Trump joked about suing his nominee for the Federal Reserve chair, Kevin Warsh, if he failed to comply with presidential demands.
“Mr Secretary, can you commit right here and now that Trump’s Fed nominee Kevin Warsh will not be sued, will not be investigated by the Department of Justice, if he doesn’t cut interest rates exactly the way that Donald Trump wants?” Warren asked.
Bessent evaded making such a commitment. “That is up to the president,” he replied.
Last week, Trump announced Warsh would be his pick to replace the current Federal Reserve chair, Jerome Powell, who has faced bitter criticism over his decision to lower interest rates gradually.
By contrast, Trump has repeatedly demanded that interest rates be chopped as low as possible, as soon as possible.
In December, for instance, he told The Wall Street Journal that he would like to see interest rates at “one percent and maybe lower than that”.
“We should have the lowest rate in the world,” he told the newspaper. Currently, the federal interest rate sits around 3.6 percent.
Experts say a sudden drop in that percentage could trigger a short-term market surge, as loans become cheaper and money floods the economy. But that excess cash could drive down the value of the dollar, leading to higher prices in the long term.
Traditionally, the Federal Reserve has served as an independent government agency, on the premise that monetary decisions for the country should be made without political interference or favour.
But Trump, a Republican, has sought to bring the Federal Reserve under his control, and his critics have accused him of using the threat of legal action to pressure Federal Reserve members to comply with his demands.
In August, for instance, he attempted to fire Federal Reserve Governor Lisa Cook based on allegations of mortgage fraud, which she has denied.
Cook had been appointed to the central bank by Trump’s predecessor and rival, Democrat Joe Biden, and she has accused Trump of seeking her dismissal on political grounds. The Supreme Court is currently hearing the case.
Then, in early January, the Department of Justice opened a criminal investigation into Powell, echoing accusations Trump made, alleging that Powell had mismanaged renovations to the Federal Reserve building.
Powell issued a rare statement in response, accusing Trump of seeking to bully Federal Reserve leaders into compliance with his interest rate policy.
“The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President,” Powell wrote.
Given the string of aggressive actions against Powell and Cook, Trump’s joke about suing Warsh fuelled rumours that the Federal Reserve’s independence could be in peril.
Within hours of making the joke on January 31, Trump himself faced questions about how serious he might have been.
“It’s a roast. It’s a comedy thing,” Trump said of his remarks as he spoke to reporters on Air Force One. “It was all comedy.”
Warren, however, pressed Bessent about Trump’s remarks and chided the Treasury chief for not rejecting them.
“I don’t think the American people are laughing,” Warren told Bessent. “They’re the ones who were struggling with the affordability.”
The prospect of Trump exerting undue influence over the Federal Reserve even earned a measure of bipartisan criticism during Thursday’s council meeting.
Senator Thom Tillis, a Republican from North Carolina, opened his remarks to Bessent with a statement denouncing the probe into Powell, even though he acknowledged he was “disappointed” with the current Fed chair.
Still, Tillis emphasised his belief that Powell committed no crime, and that the investigation would discourage transparency at future Senate hearings.
He imagined future government hearings becoming impeded by legal formalities, for fear of undue prosecution.
“They’re going to be flanked with attorneys, and anytime that they think that they’re in the middle of a perjury trap, they’re probably just going to say, ‘I’ll submit it to the record after consultation with my attorneys,’” Tillis said, sketching out the scenario.
“Is that really the way we want oversight to go in the future?”
For his part, Bessent indicated that he backed the Federal Reserve’s long-term goal to keep interest rates at about 2 percent.
“It is undesirable to completely eliminate inflation,” Bessent said. “What is desirable is to get back to the Fed’s 2 percent target, and for the past three months, we’ve been at 2.1 percent.”
As Thursday’s hearing continued, Bessent was forced to defend the Trump administration on several fronts, ranging from its sweeping tariff policy to its struggle to lower consumer prices.
But another element of Trump’s agenda took centre stage when Democrat Ruben Gallego of Arizona had his turn at the microphone.
Gallego sought to shine a light on the revelation in January that Trump had filed a lawsuit against the Internal Revenue Service (IRS) — part of his own executive branch.
Trump is seeking $10bn in damages for the leak of his tax returns during his first term as president. The IRS itself was not the source of the leak, but rather a former government contractor named Charles Littlejohn, who was sentenced to five years in prison.
Bessent was not named as a defendant in the lawsuit, though he currently serves both as the Treasury secretary and the acting commissioner of the Internal Revenue Service.
Critics have argued that Trump’s lawsuit amounts to self-dealing: He holds significant sway over the Justice Department, which would defend the federal government against such lawsuits, and he could therefore green-light his own settlement package.
In Thursday’s exchange with Gallego, Bessent acknowledged that any damages paid to Trump would come from taxpayer funds.
“ Where would that $10bn come from?” Gallego asked.
“ It would come from Treasury,” Bessent replied. He then underscored that Trump has indicated any money would go to charity and that the Treasury itself would not make the decision to award damages.
Still, Gallego pressed Bessent, pointing out that the Treasury would ultimately have to disburse the funds — and that Bessent would be in charge of that decision.
That circumstance, Gallego argued, creates a conflict of interest, since Bessent is Trump’s political appointee and can be fired by the president.
“Have you recused yourself from any decisions about paying the president on these claims?” Gallego asked.
Bessent sidestepped the question, answering instead, “I will follow the law.”
WASHINGTON — President Donald Trump said Friday that he will nominate former Federal Reserve official Kevin Warsh to be the next chair of the Fed, a pick likely to result in sharp changes to the powerful agency that could bring it closer to the White House and reduce its longtime independence from day-to-day politics.
Warsh would replace current chair Jerome Powell when his term expires in May. Trump chose Powell to lead the Fed in 2017 but this year has relentlessly assailed him for not cutting interest rates quickly enough.
“I have known Kevin for a long period of time, and have no doubt that he will go down as one of the GREAT Fed Chairmen, maybe the best,” Trump posted on his Truth Social site. “On top of everything else, he is ‘central casting,’ and he will never let you down.”
The appointment, which requires Senate confirmation, amounts to a return trip for Warsh, 55, who was a member of the Fed’s board from 2006 to 2011. He was the youngest governor in history when he was appointed at age 35. He is currently a fellow at the right-leaning Hoover Institution and a lecturer at the Stanford Graduate School of Business.
In some ways, Warsh is an unlikely choice for the Republican president because he has long been a hawk in Fed parlance, or someone who typically supports higher interest rates to control inflation. Trump has said the Fed’s key rate should be as low as 1%, far below its current level of about 3.6%, a stance few economists endorse.
During his time as governor, Warsh objected to some of the low-interest rate policies that the Fed pursued during and after the 2008-09 Great Recession. He also often expressed concern at that time that inflation would soon accelerate, even though it remained at rock-bottom levels for many years after that recession ended.
But more recently, however, in speeches and opinion columns, Warsh has said he supports lower rates.
Warsh’s appointment would be a major step toward Trump asserting more control over the Fed, one of the few remaining independent federal agencies. While all presidents influence Fed policy through appointments, Trump’s rhetorical attacks on the central bank have raised concerns about its status as an independent institution.
The announcement comes after an extended and unusually public search that underscored the importance of the decision to Trump and the potential impact it could have on the economy. The chair of the Federal Reserve is one of the most powerful economic officials in the world, tasked with combating inflation in the United States while also supporting maximum employment. The Fed is also the nation’s top banking regulator.
The Fed’s rate decisions, over time, influence borrowing costs throughout the economy, including for mortgages, car loans and credit cards.
For now, Warsh would fill a seat on the Fed’s governing board that was temporarily occupied by Stephen Miran, a White House adviser who Trump appointed in September. Once on the board, Trump could then elevate Warsh to the chair position when Powell’s term ends in May.
Since Trump’s reelection, Warsh has expressed support for the president’s economic policies, despite a history as a more conventional, pro-free trade Republican.
In a January 2025 column in The Wall Street Journal, Warsh wrote that “the Trump administration’s strong deregulatory policies, if implemented, would be disinflationary. Cutbacks in government spending — inspired by the Department of Government Efficiency — would also materially reduce inflationary pressures.” Lower inflation would allow the Fed to deliver the rate cuts the president wants.
Since his first term, Trump has broken with several decades of precedent under which presidents have avoided publicly calling for rate cuts, out of respect for the Fed’s status as an independent agency.
Trump has also sought to exert more control over the Fed. In August he tried to fire Lisa Cook, one of seven governors on the Fed’s board, in an effort to secure a majority of the board. He has appointed three other members, including two in his first term.
Cook, however, sued to keep her job, and the Supreme Court, in a hearing last week, appeared inclined to let her keep her job while her suit is resolved.
Economic research has found that independent central banks have better track records of controlling inflation. Elected officials, like Trump, often demand lower interest rates to juice growth and hiring, which can fuel higher prices.
Trump had said he would appoint a Fed chair who will cut interest rates, which he says will reduce the borrowing costs of the federal government’s huge $38 trillion debt pile. Trump also wants lower rates to boost moribund home sales, which have been held back partly by higher mortgage costs. Yet the Fed doesn’t directly set longer-term interest rates for things like home and car purchases.
If confirmed by the Senate, Warsh would face challenges in pushing interest rates much lower. The chair is just one member of the Fed’s 19-person rate-setting committee, with 12 of those officials voting on each rate decision. The committee is already split between those worried about persistent inflation, who’d like to keep rates unchanged, and those who think that recent upticks in unemployment point to a stumbling economy that needs lower interest rates to bolster hiring.
Financial markets could also push back. If the Fed cuts its short-term rate too aggressively and is seen as doing so for political reasons, then Wall Street investors could sell Treasury bonds out of fear that inflation would rise. Such sales would push up longer-term interest rates, including mortgage rates, and backfire on Warsh.
Trump considered appointing Warsh as Fed chair during his first term, though ultimately he went with Powell. Warsh’s father-in-law is Ronald Lauder, heir to the Estee Lauder cosmetics fortune and a longtime donor and confidant of Trump’s.
Prior to serving on the Fed’s board in 2006, Warsh was an economic aide in George W. Bush’s Republican administration and was an investment banker at Morgan Stanley.
Warsh worked closely with then-Chair Ben Bernanke in 2008-09 during the central bank’s efforts to combat the financial crisis and the Great Recession. Bernanke later wrote in his memoirs that Warsh was “one of my closest advisers and confidants” and added that his “political and markets savvy and many contacts on Wall Street would prove invaluable.”
Warsh, however, raised concerns in 2008, as the economy tumbled into a deep recession, that further interest rate cuts by the Fed could spur inflation. Yet even after the Fed cut its rate to nearly zero, inflation stayed low.
And he objected in meetings in 2011 to the Fed’s decision to purchase $600 billion of Treasury bonds, an effort to lower long-term interest rates, though he ultimately voted in favor of the decision at Bernanke’s behest.
In recent months, Warsh has become much more critical of the Fed, calling for “regime change” and assailing Powell for engaging on issues like climate change and diversity, equity and inclusion, which Warsh said are outside the Fed’s mandate.
His more critical approach suggests that if he does ascend to the position of chair, it would amount to a sharp transition at the Fed.
In a July interview on CNBC, Warsh said Fed policy “has been broken for quite a long time.”
“The central bank that sits there today is radically different than the central bank I joined in 2006,” he added. By allowing inflation to surge in 2021-22, the Fed “brought about the greatest mistake in macroeconomic policy in 45 years, that divided the country.”
Rugaber writes for the Associated Press.
FROM playing music out loud to putting your feet on the seats – travelling by train in the UK can be an infuriating experience.
But I’ve found a new frustrating trend – reserved carriages for school groups.
As someone who regularly commutes to London by train, I already have the daily battle of finding a seat, especially one with a table.
But I’ve noticed a recent surge in entire carriages being booked by teachers ahead of taking entire classes into London for the day.
According to Southeastern: “If your group is at least 30 people, we can look into reserving a carriage for you, although it may not always be possible during busier periods.
“Reserved carriages will generally be at the rear of a train, and will be marked with labels in the windows and on the doors stating that the carriage is reserved for your group.
“There isn’t a charge for reserving a carriage.”
While this may sound grumpy at first – after all, who wants to try and find 30 seats for school kids – my complaint comes with both the timing and space.
My train is regularly a four-carriage train until later in the journey.
Not only that, but as a commuter train, seats cannot be reserved until other train operators, so most seats are find-as-you-get-on.
So with a whole carriage taken up by a school, it ends up making these other busy carriages already a lot more chaotic.
A poor train conductor had the awkward task of kicking everyone already sitting in the carriage before the reserved time out onto the platform as they waited for an attachment
Not only that, but many of them are being booked for the morning commute, often around 9am.
In my opinion, there should be blocked out times to allow weary office-dwellers their last chance of respite before having to be stuck staring at a computer for nine hours.
At least there is one upside – I know which carriage to actively avoid unless I want to be subjected to streams of TikTok videos being played out loud next to me.
However, the Sun’s Head of Travel (Digital) Caroline McGuire backs reserved carriages.
She said: “As a school mum who has been on a lot of class trips in recent years, I think this decision by the train company to reserve an entire carriage for the kids is genius.
“Herding a group of children on and off transport through London – one of the world’s busiest cities – is a nightmare.
“Will you get them all in one carriage? Will one get left behind? Will they all get seats?
“Will the ‘other’ members of the public get annoyed with the exceptionally loud noise that accompanies 30-plus kids on a day out?
“This allows them to make sure all of the children travel safely, while causing minimal issues for other passengers.
“It’s so smart, I’m considering suggesting it to my child’s school next time that I accompany them on a trip.”
A train company recently launched adult-only carriages.
And here’s a converted train carriage you can spend the night in.
The United States Federal Reserve is holding interest rates steady in its first rate decision of 2026.
Rates will remain at 3.5 to 3.75 percent, the Fed said on Wednesday, defying US President Donald Trump’s calls for more aggressive interest rate cuts.
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“The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. Uncertainty about the economic outlook remains elevated,” the central bank said in its release announcing the decision.
Wednesday’s decision was widely expected. CME FedWatch, a tool that tracks expectations for monetary policy, forecast a more than 97 percent chance that the central bank would hold rates steady.
The tracker also expects two rate cuts in 2026, with the highest probability for the first cut occurring in June at the earliest.
“Available indicators suggest that economic activity has been expanding at a solid pace. Job gains have remained low, and the unemployment rate has shown some signs of stabilization,” the central bank said.
The decision comes amid signs of stabilisation in the US labour market. The US economy added 584,000 jobs in 2025, marking the lowest annual job growth since 2003. Payrolls rose by 64,000 jobs in October and 50,000 in December. While job growth remains weak, December’s figure represents a modest rebound from October, when the economy lost 105,000 jobs, according to the Bureau of Labor Statistics.
There are indications that the labour market may cool further in the months ahead. This week, both Amazon and UPS announced tens of thousands of job cuts, some of which were driven by a push towards increasing the use of artificial intelligence in the workplace.
Another threat to the US economy and the job market comes in the form of a looming government shutdown. That can happen as early as Saturday, and depending on its duration, it could slow spending as federal workers are temporarily left without paycheques.
The decision to hold interest rates steady comes despite Trump’s increased pressure on the central bank to cut rates. Fed Chairman Jerome Powell has long stressed the Federal Reserve’s independence, and Wednesday’s decision is the first since Powell’s rebuke of a criminal Department of Justice investigation into him. The central bank chair, whose term expires in May, called the inquiry a “pretext” to pressure him.
“The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the president,” Powell said in remarks in early January in response to a subpoena.
Last week, the Supreme Court heard arguments in a case examining whether Trump has the legal authority to remove Fed Governor Lisa Cook amid allegations of mortgage fraud.
Meanwhile, Fed Governor Stephan Miran’s term is set to expire this week. Trump picked Miran to temporarily fill the seat vacated by Adriana Kugler in August while seeking a more permanent replacement.
Miran was one of two central bank governors who voted to lower interest rates alongside Christopher Waller.
The developments come as Trump searches for a new Fed chair. He has explicitly called for further interest rate cuts and for a chairman who shares his views.
“Anybody that disagrees with me will never be the Fed Chairman!” Trump said in a post on Truth Social in December.
The political pressure has caught the attention of global central banks as well.
“The Federal Reserve is the biggest, most important central bank in the world, and we all need it to work well. A loss of independence of the Fed would affect us all,” Bank of Canada Governor Tiff Macklem said on Wednesday. Canada’s central bank held rates steady ahead of the US central bank’s decision.
Macklem was one of the central bank heads who earlier this month issued a joint statement backing Powell. Last September, Macklem said Trump’s attempts to pressure the Fed were starting to hit markets.
The Dow Jones Industrial Average is flat, as is the Nasdaq, and the S&P 500 is down 0.1 in midday trading.
