U.S. Sen. Rick Scott, a frequent critic of the Federal Reserve, is now calling for more quantitative tightening from the central bank.
The timing is deliberate. The Fed’s Federal Open Market Committee meeting began Wednesday. Fed Chair Jay Powell will hold a press conference Wednesday afternoon, which is likely to give clues as to future moves.
Scott notes that Powell said earlier this month that the Fed “may stop the reduction of its balance sheet,” which the Senator finds “deeply concerning” in light of increasing liabilities on the books.
“When we first met over six years ago in 2019, the Fed’s balance sheet was $3.8 trillion. Under your tenure as chair, the Fed’s balance sheet ballooned to nearly $9 trillion, fueled by 4.7 trillion in security purchases you oversaw between March 2020 and March 2022. It now sits at a whopping $6.6 trillion after you have failed to reach any single self-established benchmark to pay it down,” Scott wrote.
“The Fed can fulfill its mission of providing stability for the American people and reducing its balance sheet, but that requires changing the status quo. For example, the Fed is currently operating with over $243 billion in losses, with taxpayers on the hook, but this could be significantly reduced by ending the Fed’s Interest on Reserve Balances program, which pays interest to banks on reserves and wasted $186 billion in 2024 alone.”
Scott has called for an audit of the Fed, accusing Powell of “disastrous mismanagement” in his role. Americans will know soon enough if the soon-to-be-former Chair takes his latest advice.
