Bessent says Fed forecasts relied on 'flawed models' - WSJ

Bessent says Fed forecasts relied on 'flawed models' - WSJ

The Federal Reserve's forecasting models have come under scrutiny following a critique by Federal Reserve Board member Loretta M. Bessent. Bessent has publicly stated that the Fed's economic projections are based on "flawed models," raising concerns about the accuracy and reliability of the central bank's economic forecasts [NUMBER:1].

Bessent's comments come at a time when the Federal Reserve is facing increasing pressure to maintain its independence and credibility. President Donald Trump has been actively pushing for interest rate cuts and has attempted to influence the Fed's policy decisions. This has led to growing concerns among investors regarding the independence of the Federal Reserve and its ability to make unbiased economic forecasts [NUMBER:2].

The Fed's forecasting models have been a subject of debate for years, with critics arguing that they fail to accurately predict economic trends and are overly reliant on historical data. Bessent's critique has added to these concerns, suggesting that the models used by the Fed may not be adequate for making informed policy decisions.

The impact of Bessent's critique on financial markets remains to be seen. However, it is clear that the Fed's credibility and the reliability of its economic forecasts are being closely watched by investors and financial professionals. As the Fed continues to face pressure from political figures and other stakeholders, it will be crucial for the central bank to address these concerns and demonstrate that its forecasting models are robust and reliable.

References:
[1] https://www.ainvest.com/news/ftc-study-ai-chatbot-impact-children-requests-documents-openai-meta-wsj-2509/
[2] https://news.futunn.com/en/post/61671828/wall-street-sounds-the-alarm-concerns-over-the-independence-of