In the wake of the Fed’s latest 25 bps rate cut, U.S. Treasury Secretary Scott Basent has delivered a rare and fiery critique of the central bank — openly challenging its credibility and forecasting approach.
While acknowledging that the rate reduction was “a step forward,” Basent accused the Federal Reserve of being “anchored in outdated thinking,” arguing that its economic models no longer reflect today’s financial realities. He claimed that the Fed’s inflation and growth projections have repeatedly missed the mark, calling for a complete overhaul of how policy decisions are made.
💥 Leadership Change on the Horizon?
Basent revealed that a second phase of internal evaluations is scheduled for December — a move many insiders see as an early sign that Jerome Powell’s replacement could be selected before Christmas. Behind the scenes, it appears the groundwork for a leadership transition has already begun.
📉 Key Points of Contention:
1. Lagging Rate Policy: The Treasury argues that the Fed is reacting too slowly to economic shifts.
2. Internal Discord: Conflicting data and policy disagreements are paralyzing decision-making.
3. Outdated Forecasting Models: The Fed’s analytical tools, Basent says, fail to capture real-time employment and inflation trends.
Basent stressed that the Federal Reserve now needs a leader unafraid to challenge legacy systems and rebuild its policy framework “from the ground up.”
Meanwhile, in his post-meeting remarks, Chair Powell maintained a cautious tone, citing internal disagreements and the ongoing government shutdown as key obstacles to gathering reliable data — factors that could hinder another rate cut in December.
The escalating tension between the Treasury and the Fed marks a pivotal moment, as the Trump administration appears ready to reshape the future direction of U.S. monetary leadership.
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