Bessent Reportedly Says Fed Must Change Course To Preserve Independence

U.S. Treasury Secretary Scott Bessent on Friday said that the Federal Reserve is putting its own independence at risk by operating under what he called a “gain of function” monetary policy.

In an opinion piece for The Wall Street Journal, Bessent argued that the central bank’s “policy experiment” includes overuse of nonstandard policies, mission creep, and institutional bloat, which threaten its independence. “The Fed must change course,” he wrote, contending that its toolkit has become too complex and depends on uncertain theoretical foundations.

Bessent added that by failing to meet its inflation mandate, the Fed has deepened class and generational divides. He said its strategy of chasing a wealth effect to drive growth ultimately backfired, undermining confidence in the institution’s ability to balance economic stability with political independence.

“The U.S. faces short- and medium-term economic challenges, along with the long-term consequences of a central bank that has placed its own independence in jeopardy,” Bessent wrote. The Fed, he argued, must rebuild credibility by refocusing on its statutory goals of full employment, price stability, and moderate long-term interest rates—priorities that underpin public trust and institutional legitimacy.

U.S. equities slipped into the red by midday Friday, as the S&P 500’s early record high faded and rate-cut optimism gave way to concerns about a slowing economy after a weaker-than-expected August jobs report. The SPDR S&P 500 ETF (SPY) was down 0.45%, the SPDR Dow Jones Industrial Average ETF (DIA) slipped 0.57%, and the Nasdaq-100 tracking Invesco QQQ Trust (QQQ) fell 0.09%. Retail sentiment around QQQ on Stocktwits moved lower within the ‘extremely bearish’ territory over the past day. 

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