Treasury Secretary Scott Bessent said Wednesday that inflation remains the central economic challenge facing the country and warned that the Federal Reserve lost public trust by allowing prices to spiral and “ravage incomes.”

Testifying before the House Financial Services Committee, Bessent said the Federal Reserve’s independence ultimately rests on Americans’ confidence in the central bank — confidence he argued was shaken by the surge in inflation over the past several years.

“The independence of the Federal Reserve is based on trust,” Bessent said. “That trust was lost when inflation was allowed to get out of control and ravage incomes.”

Bessent said inflation has cooled from prior highs but stressed that progress remains uneven, particularly in housing and services.

The Treasury Secretary cautioned that premature easing of monetary policy could risk reigniting price pressures and undoing recent gains.

Asked about criticism of the Fed by President Donald Trump, Bessent said the president has the right to publicly express his views on monetary policy decisions — just as lawmakers such as Democratic Senator Elizabeth Warren and others routinely do.

While emphasizing the importance of Fed independence, Bessent said transparency and accountability are critical to restoring credibility with the public.

Bessent also reiterated his longstanding support for a strong dollar policy, saying it remains a cornerstone of U.S. economic stability.

Bessent said the U.S. economy was growing and inflation was coming down, despite a slew of tariffs imposed by Trump since taking office a year ago.

"So tariff inflation was the dog that didn't bark," he told lawmakers.

U.S. data last month showed a larger-than-expected rise in the Producer Price Index in December, suggesting inflation could pick up in the months ahead. 

Bessent's remarks come as investors and lawmakers closely watch the Federal Reserve ahead of upcoming policy meetings, amid renewed debate over interest rates, inflation risks, and the central bank’s long-term direction.