WASHINGTON (MarketWatch) — Two top Federal Reserve officials who opposed the latest round of Fed asset purchases have waded into tricky political waters by suggesting that lawmakers could tie the Fed’s hands if they wanted to block more asset purchases.
“A future Congress might restrict us to a single mandate – like other central banks in the world operate under – focused solely on price stability,” said Richard Fisher, the president of the Dallas Federal Reserve Bank in a speech on Wednesday night in New York.
Earlier in the week, another regional Fed bank president, James Bullard of St. Louis, was even stronger, saying he supported restricting the dual mandate to a single inflation-fighting goal.
Bullard said supporters of QE3 had placed too much emphasis on the Fed’s ability to bring down unemployment. He said monetary policy, in reality, could only have temporary effects on the jobless rate. His comments came in an interview with Reuters.
At stake is the Fed’s operating charter that calls for the central bank to conduct policy with two goals, or mandates: keeping unemployment low and inflation stable.
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