U.S. Treasury Secretary Vincent Bescent attacks the Federal Reserve's interest rate management mechanism

The Federal Reserve's mechanism for managing interest rates is struggling and needs to be simplified, Treasury Secretary Vincent Bescent said on Tuesday. "We have reached a point where monetary policy has become very complex," and the Fed should "make it simple," Bescent said. "The Fed has brought us into a new system, the so-called ample reserve system. From the perspective of whether or not the reserve is abundant, this mechanism seems to be loosening," Bescent said. Bescent did not specify what he meant by "loose." Bescent, who has been a critic of the Federal Reserve, expressed particular concerns about the Fed's large balance sheet. Bescent and others, including some at the Fed, argue that the large balance sheet distorts the level of market pricing. There are also concerns about the Fed's complex approach to managing interest rates, which relies on liquidity tools and abandons the highly managed system used before the financial crisis nearly two decades ago.