Scott Bessent says Fed should use large-scale asset purchases sparingly

U.S. Treasury Secretary Scott Bessent on Wednesday said the Federal Reserve should use large-scale asset purchases sparingly, but he is not advocating that the Federal Reserve shift away from its current approach for managing its benchmark interest rate.

Bessent, speaking to reporters on the sidelines of the International Monetary Fund and World Bank annual meetings in Washington, said use of so-called quantitative easing should "not be part of business as usual."

Referring to a recent newspaper opinion piece he authored about how the U.S. central bank should function, Bessent said: "I was not advocating to shrink this balance sheet or to move away from the ample-reserve system. I was just saying that just like antibiotics, each successive intervention has less efficacy."

The Fed changed how it manages its benchmark interest rate - the federal funds rate - during the 2007-2009 financial crisis and relies on its now-large portfolio of bonds to control rates through an "ample reserves" approach.