US Treasury Secretary Bessent harshly criticized the Federal Reserve for exacerbating wealth inequality, calling on the central bank to undergo structural 'downsizing' and step back from the forefront, reversing the era of loose policies over the past 15 years.
U.S. Treasury Secretary Besant confirmed that the government is actively interviewing candidates for the next chair of the Federal Reserve. The Federal Reserve chair sought by the government must be committed to reducing the scope of the Federal Reserve's functions and ending the era of "permanent quantitative easing" (QE).
In his annual economic review on the 'All-In' podcast, Bessent stated that the monetary policy of the past 15 years would undergo a drastic shift. He argued that the Fed's 'functional expansion' experiment—particularly the large-scale asset purchase program initiated in 2008—must be rolled back to restore economic fairness.
Bessent criticized post-financial crisis monetary policy, labeling the Federal Reserve as an 'engine of inequality.' While acknowledging that the Fed is not responsible for creating equality, he contended that it should not actively widen wealth disparities.
Bessent noted: 'We have ultimately ended up with this two-tiered economy: either you are an asset holder, or you are not.' He pointed out that by artificially depressing interest rates and purchasing trillions of dollars in assets, the Federal Reserve inflated the value of the wealthy’s portfolios while leaving ordinary people behind.
Bessent mentioned that the Federal Reserve engaged in 'modern monetary practices,' referring to the monetization of government debt. He emphasized that the next chair must treat quantitative easing solely as an emergency tool, rather than standard operating procedure.
Beyond monetary policy, Bessent also called for structural downsizing at the Federal Reserve. He criticized the institution for lacking budgetary oversight, pointing out that the Fed essentially 'prints its own money' and operates without the fiscal discipline required of other government agencies.
When discussing the candidates currently under review, Bessent stated: 'Everyone wants to see a smaller institution and greater predictability.'
He stressed that the Federal Reserve should step back into the background, rather than keeping markets 'on edge about every word the chair says.'
Bessent confirmed that he had conducted in-depth interviews with several leading candidates, including Kevin Warsh, Kevin Hassett, and Federal Reserve Governor Christopher Waller.
He hinted that all final contenders agree with the administration’s vision for a 'traditional' Federal Reserve: one focused on price stability rather than managing the entire economy.
Bessent concluded: "I probably understand better than anyone... what needs to be done." This indicates that as the government prepares for 2026, the nominee will soon be announced.
Despite a series of policy and economic headwinds, the U.S. stock market remained resilient in 2025, with all three major benchmark indices posting gains for the year.$S&P 500 Index (.SPX.US)$up 17.74%,$Nasdaq Composite Index (.IXIC.US)$and$Dow Jones Industrial Average (.DJI.US)$rising 22.20% and 14.27%, respectively.
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