Republican Proposal Takes Aim at Fed’s Dual Role

By SEWELL CHAN
NYT

WASHINGTON — Criticism of the Federal Reserve intensified on Tuesday as conservative Republican lawmakers called for limiting the central bank’s mandate to keeping inflation low. They said that the Fed should stop trying to pursue the twin goals of balancing inflation and unemployment, as it has been required to do since 1977.

The Republican proposal was the latest example of the increasingly partisan antipathy toward the Fed’s decision on Nov. 3 to inject $600 billion into the economy in an effort to lower long-term interest rates.

The legislation would be anathema to most Democrats, who say they believe that low inflation and low unemployment should be given equal weight. The latest proposal appears to be gathering support among Republicans, who will control the House starting in January, but is all but certain to be blocked by Democrats if it reaches the Senate.

The Fed is rare among central banks in having a dual mandate. Under federal law, it has two equal objectives — maintaining price stability and maximizing employment — although those two goals have at times been difficult to reconcile.

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