Scott Bessent has never been a fan of the Federal Reserve’s forecasting habit. Now, as US Treasury Secretary, he’s saying the quiet part out loud: the Fed’s forward guidance isn’t just unhelpful, it’s actively misleading markets.
The numbers behind the criticism
In a Spring 2025 interview, Bessent laid out his case with receipts. The Fed’s two-year forward GDP projections overstated growth by 7.6% between 2010 and 2016. The average error in two-year GDP forecasts came in at 1.1 percentage points. When actual GDP growth averaged around 2%, the forecasting error represented roughly 58% of the real number.
Then there’s inflation. The Fed’s projections missed the 2021 PCE inflation rate by 4 percentage points. Bessent didn’t mince words. He called the SEP an “embarrassment” and said it should be abolished entirely.
From trader to Treasury: a consistent skeptic
