By Leika Kihara
TOKYO (Reuters) -U.S. Treasury Secretary Scott Bessent said the new Federal Reserve chair should be someone “who can examine the whole organization” as the Fed’s mission has included so many things outside of monetary policy and has put its independence at risk, Japan’s Nikkei newspaper reported.
“It’s someone who has to have the confidence of the markets, the ability to analyze complex economic data,” Bessent told the Nikkei in an interview, when asked about the qualities the new Fed chair should possess.
“And it’s also someone who wants to be, I think, very attuned to forward thinking, as opposed to relying on historical data,” Bessent was quoted as saying in the interview, which was conducted in Washington on August 7 and published on Monday.
A source has told Reuters that Bessent is leading a search for a successor to Fed Chair Jerome Powell, with an expanded list that includes a longtime economic consultant and a past regional Fed president.
When asked about President Donald Trump’s calls for the Fed to cut interest rates, Bessent said while Trump makes his opinion known, “at the end of the day, the Fed is independent.”
On exchange rates, Bessent said his administration’s definition of a strong dollar was not about the price on the screen, which was set by the market, but the relative price against other currencies, according to the Nikkei.
“The strong dollar policy is to have policies that continue to keep the U.S. dollar the reserve currency. And if we have good economic policies, then the dollar will naturally be strong,” Bessent was quoted as saying.
Bessent has overseen U.S. discussions with Japan on exchange rates with his counterpart Katsunobu Kato. At their meeting held on the sidelines of a G7 gathering in May, the two agreed that the dollar-yen exchange rate at the time reflected fundamentals.
In its exchange-rate report to Congress in June, the U.S. Treasury Department said the Bank of Japan (BOJ) should keep tightening monetary policy, which would support a “normalization of the yen’s weakness.”
“I think that as long as the BOJ focuses on economic fundamentals, inflation and growth, the currency will take care of itself,” Bessent said.
“So, I believe that governor (Kazuo) Ueda and the BOJ board is targeting an inflation outcome, not a currency outcome,” he was quoted as saying.
The BOJ last year exited a decade-long, massive stimulus and raised short-term interest rates to 0.5% in January on the view Japan was close to durably hitting its 2% inflation target.
But it has stressed the need to tread carefully in raising rates further, with the slow pace of hikes seen by some analysts as a factor that has kept the yen low against other currencies.
While inflation remains above the BOJ’s 2% target for more than three years, Ueda has called for the need to scrutinise the impact U.S. tariffs could have on Japan’s fragile economy.
(Reporting by Leika Kihara; editing by Diane Craft)
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