US treasury department demands retraction of story on increased oversight of Federal Reserve

The US Treasury Department demanded on Friday that the Financial Times (FT) retract a report on treasury secretary Scott Bessent’s views on the Federal Reserve, accusing the newspaper of publishing “false claims” in a formal complaint that was escalated to the news outlet’s parent company, Nikkei Inc.The email from treasury officials, addressed to senior editors at the FT and Nikkei, disputed multiple claims in the story and criticized the headline as misrepresenting the underlying reporting.The FT reported on 26 March that Bessent had discussed increasing oversight of the Federal Reserve in a way that resembled the Bank of England, including through regular communication between its governor and Britain’s chancellor over inflation targets.Treasury officials denied that Bessent had endorsed such views or discussed adopting similar practices in Washington. They also took issue with the headline, which said Bessent had “praised” the Bank of England model for tighter oversight even though that did not appear in the text of the story.“The Secretary has never made any of the above statements in public or private,” the acting assistant secretary for public affairs, Elliott Hulse, wrote in the email, which was forwarded to the Guardian by a person directly familiar with the matter on the condition of anonymity.“At no time has the secretary ‘discussed tightening the US Treasury’s oversight of the Federal Reserve by adopting elements of the Bank of England’s model in a step that would shake up the central bank’s relationship with government,’” the email said.“At no time has the secretary indicated, implied, or asserted that he ‘could support the UK system in which the BoE governor corresponds regularly with the chancellor about the central bank’s inflation target,’” it added.The complaint marked the latest effort by the US treasury to discredit the FT report. On Thursday, Bessent posted his own denials on social media, writing in part: “In short, FT has literally manufactured an entirely fake policy position for me and the Administration.”Treasury officials stopped short of issuing a legal threat, but cited provisions in the editors code of practice established by the UK’s Independent Press Standards Organization, or Ipso, which requires publications to avoid misleading or distorted information.The FT is not a member of Ipso and it was not immediately clear whether treasury officials would pursue additional efforts against the newspaper. A spokesperson for the FT did not return comment on the disputed elements of the story or on the complaint from the treasury.The FT report comes amid heightened sensitivity in financial markets and among treasury officials about the Federal Reserve’s political independence following Donald Trump’s repeated threats to fire its chair, Jerome Powell, for ignoring his demands to reduce borrowing costs.Trump has also accused the Fed chair of mismanaging renovations at the central bank’s headquarters and then lying to Congress about those plans – which sparked a criminal investigation and subsequent jitters from investors who saw the move as a threat designed to pressure Powell.Investors place a premium on the Fed maintaining its independence in making policy decisions, rather than on the political preferences of the president. Investors worry that cutting rates too aggressively could lead to rapid inflation, which would later require sharp rate increases to correct.