US Treasury Secretary Bessent Urges Fed Independence Review Amid Credibility Concerns

Treasury Secretary Scott Bessent has criticized the Federal Reserve for overstepping its core mission by taking on extensive banking regulation, which he argues jeopardizes the Fed's independence and credibility. He called for an independent, nonpartisan review of the Federal Reserve covering monetary policy, regulation, communications, staffing, and research to restore trust with the American public. Bessent emphasized that the Fed's regulatory role creates conflicts of interest, blurring accountability and risking its political legitimacy. This critique aligns with concerns raised about President Trump's actions, including the firing of Fed Governor Lisa Cook, which some view as threats to the Fed's independence within the broader context of the administration's emphasis on the Unitary Executive Theory. The market, however, appears largely unperturbed by these developments, suggesting skepticism about the degree of Fed independence or the impact of recent political moves. Overall, there is a growing call for the Fed to refocus on its foundational goals of promoting full employment, stable prices, and moderate long-term interest rates while scaling back distortions in the economy.