Congress wants to micromanage the Federal Reserve

Source: Jared Bernstein, Washington Post (Paid Registration)

For central banks to be most effective in carrying out their mandates, they must be politically independent. Of course, the Federal Reserve must meet the broad mandates Congress legitimately sets for it, which in the U.S. case is full employment at stable inflation. But any micromanaging of how the Fed meets its mandates by those who hold political office raises the specter of politicizing the bank’s actions. As Fed Chair Janet L. Yellen recently wrote in a sharp critique of the proposal, the “framework” wherein central banks independently pursue their statutory goals “is now recognized as a fundamental principle of central banking around the world.”

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