Treasury Secretary Scott Bessent Turns Up the Heat on Fed's Powell

Treasury Secretary Scott Bessent Turns Up the Heat on Fed's Powell By Vicky Ge Huang

Treasury Secretary Scott Bessent, who previously urged President Trump not to fire Federal Reserve Chair Jerome Powell is now publicly building a case against him. Meanwhile, two Democratic senators are demanding that government officials turn over records related to the Justice Department's criminal probe of Powell. And bond investors cautiously await Trump's speech at the World Economic Forum in Davos, Switzerland, which could spark further volatility amid tensions over his plans to acquire Greenland. Elsewhere, Indonesia's central bank kept interest rates unchanged at its first policy meeting of the year, as the rupiah slid to record lows and concerns mounted over the country's fiscal outlook.

Top News Treasury Secretary Scott Bessent Turns Up the Heat on Fed's Powell

Treasury Secretary Scott Bessent, who for the past year has been seen as the Trump administration's moderating voice on Jerome Powell, delivered his most pointed public critique

of the Federal Reserve chair to date.

During a CNBC interview on Tuesday, Bessent said it was inappropriate for Powell to attend Wednesday's oral arguments in the case of Fed governor Lisa Cook, arguing that his attendance would be an attempt to "put his thumb on the scale" for the institution.

Democratic Senators Demand Records on Powell Probe

Two Democratic senators are demanding that Trump administration officials turn over records

related to the Justice Department's criminal probe of Federal Reserve Chair Jerome Powell, the first official congressional response to the subpoenas the Fed received earlier this month.

U.S. Economy Greenland Clash Risks Undermining the U.S. in World Economic Order

Escalating tensions over Greenland are supercharging a dynamic that was already under way: a shift in the world economic order

that had put the U.S. at the center of the global economy.

U.S.-Europe Tensions Simmer at Davos Ahead of Trump Address The $100 Billion of U.S. Goods at Risk of Tariffs in Trump's Greenland Push

U.S. to Press Ahead With EU Trade Deal Despite Opposition, Bessent Says

Trump Outlines Next Steps for Housing Investor Ban

Trump accelerated his effort to ban

institutional investors from buying single-family homes, issuing an executive order Tuesday that laid out new steps to stop Wall Street home purchases.

Mortgage Rates Start Rising Again

Mortgage rates are reversing course

after falling last week to their lowest level since September 2022. The 30-year mortgage rate-which tends to loosely track the 10-year Treasury yield-rose to about 6.2% on Tuesday, Bankrate showed.

Key Developments Around the World Indonesia's Central Bank Holds as Rupiah, Policy Worries Mount

Bank Indonesia on Wednesday maintained its benchmark seven-day reverse repo rate

at 4.75%, marking a fourth consecutive meeting, as expected by all seven economists polled by The Wall Street Journal. The overnight deposit facility rate was held at 3.75% and the lending facility rate at 5.50%.

BOJ Likely to Take a Breather as It Gauges Impact of Last Hike

The Bank of Japan is likely to hold policy settings steady

this week as it examines the effects of its latest interest-rate hike in December.

Bond-Market Backlash Triggers Reality Check for Japan Leader Ahead of Election

U.K. Inflation Rose More Than Expected at End of 2025

Inflation in the U.K. rose a little more than expected in December , as Bank of England policymakers mull when next to cut their key interest rate.

IEA Lifts Oil Demand Forecast But Warns Supply Surplus Persists

The International Energy Agency raised its forecast for global oil-demand growth

due to an improved economic outlook and lower crude prices, but warned supply is still expected to outpace consumption.

Financial Regulation Enforcement Cases by Trump's SEC Dropped to a Record Low

In his first public speech, the federal government's top securities regulator Paul Atkins vowed to return his agency to its core mission. The U.S. Securities and Exchange Commission would "hold accountable those who lie, cheat, and steal," Atkins said last May, after taking office under President Donald Trump.

The number of those held accountable in the Trump administration's first year fell to a record low, compared with comparable periods in the SEC's recent history. Court cases filed by the SEC in the 12 months since Trump's January 2025 inauguration dropped by a third, compared with the prior 12 months, according to data on the agency's website. (Barron's)

Forward Guidance Wednesday (all times ET)

9 a.m.: Johnson Redbook Retail Sales Index

10 a.m.: Construction Spending - Construction Put in Place

10 a.m.: Pending Home Sales Index

10 a.m.: U.S. Supreme Court hears arguments on attempt to remove Federal Reserve Governor Lisa Cook

Thursday

8:30 a.m.: GDP

8:30 a.m.: Unemployment Insurance Weekly Claims Report - Initial Claims

11 a.m.: Federal Reserve Bank of Kansas City Survey of Tenth District Manufacturing

Research 'Sell America' Thesis Likely Overdone

The "sell America" theme in markets may be overdone, according to Lawrence Werther, chief U.S. economist at Daiwa Capital Markets in an email to WSJ. "The U.S. economy appears poised for another year of solid growth and the U.S. Treasury market is the deepest and most liquid sovereign debt market in the world," Werther says. As for today's market downdraft, Werther says, "President Trump's latest move has definitely shattered the recent calm." - Jessica Coacci

About Us

WSJ Pro Central Banking brings you central banking news, analysis and insights from WSJ's global team of reporters and editors. This newsletter was compiled by markets reporter Vicky Ge Huang in New York. Send your tips, suggestions and feedback to [[e-mail]].

This article is a text version of a Wall Street Journal newsletter published earlier today.

(END) Dow Jones Newswires

01-21-26 0726ET