U.S. Treasury Secretary Becerra criticizes the Fed's interest rate management mechanism: struggling to move forward, needs simplification.

According to a report from Jin10 on November 26, U.S. Treasury Secretary Besant stated on Tuesday that the Fed's interest rate management mechanism is struggling and needs simplification. Besant said, “We have reached a point where monetary policy has become very complex,” and the Fed should “simplify things.” “The Fed has brought us into a new regime, known as the ample reserves regime. From the perspective of whether reserves are ample, this mechanism seems to be loosening,” Besant said. Besant did not specify what he meant by “loosening.” He has been a critic of the Fed and has expressed particular concern about its large balance sheet. Besant and some others, including some at the Fed, believe that the large balance sheet distorts market pricing levels. Additionally, the complex way the Fed manages interest rates is also concerning, relying on liquidity tools and abandoning the highly managed system used nearly 20 years ago before the financial crisis.