But some GOP senators want the Fed to toss aside the employment part of its mandate and focus exclusively on inflation:
Sen. Bob Corker (R-Tenn.) said Monday that he and Sen. David Vitter (R-La.) were introducing a bill to make it clear that the Federal Reserve should focus on a single mandate — stabilizing prices by keeping inflation low.
On the Senate floor Monday, Corker said the Federal Reserve Single Mandate Act would reestablish price stability as the Federal Reserve’s single mandate rather than also having the Fed work on reducing unemployment.
“Providing the Fed with a clear and explicit focus on keeping inflation low will serve America better than the broad, bipolar mandate it has today,” Corker said. “The dual mandate blurs the line between fiscal and monetary policy and allows Congress to shirk its responsibility to enact sound budgets and policies that produce economic growth.”
This has been an idea Republicans have floated a few times in recent years. But doing so would remove the one big lever left to combat joblessness, since the GOP has made it abundantly clear that Congress will not be engaging in any fiscal stimulus any time soon.
As Federal Reserve Chairman Ben Bernanke explained when defending the Fed’s recent efforts, “The conditions now prevailing in the job market represent an enormous waste of human and economic potential…Meanwhile, apart from some temporarily fluctuations, largely reflected swings in energy prices, inflation has remained tame…Against a macro economic backdrop that includes both high unemployment and subdued inflation, the FOMC will maintain its highly accommodative policy.” But the GOP would prefer that the Fed continue to fixate on non-existent inflation, at the expense of the unemployed.