WASHINGTON (Reuters) - Two U.S. Republican lawmakers said on Tuesday the Federal Reserve should focus solely on inflation and ditch its “dual mandate” to promote both price stability and full employment.
The pressure from Senator Bob Corker and Representative Mike Pence adds to the pile of international criticism over the central bank’s plan to buy an additional $600 billion in government bonds to try to speed up a sluggish economic recovery.
Opponents worry the program will weaken the dollar and sow the seeds of inflation at home and abroad without doing much to lift U.S. economic growth.
Pence said in a statement that the Fed’s dual mandate policy had “failed” and he would introduce legislation on Tuesday to strike that provision from the Federal Reserve Act of 1977.
“With no explicit plan for when or how this quantitative easing will be withdrawn, the Federal Reserve could do more for the American economy by focusing singularly on maintaining the value of the dollar and protecting the purchasing power of Americans,” Pence wrote.
The European Central Bank is among central banks with a single mandate to focus on inflation. The Bank of England must write an explanatory letter when it misses its inflation target by too wide of a margin, and did so earlier on Tuesday.
“Providing our central bank with a clear and explicit focus on keeping inflation low will serve America better than the broader mandate approach we have today,” Corker said in a statement.
Republican lawmakers, fresh off of midterm election victories that gave them control of the House of Representatives, have sharpened their criticism of the Fed in recent weeks. Some members of the Republican-heavy “Tea Party” movement have pushed for abolishing the central bank.
It was not clear whether either the House or Senate would actually move ahead with a bill to do away with the dual mandate. Senate Republican leader Mitch McConnell said voting on the mandate was “just one of many issues we’ll be working with and thinking about in the coming weeks.”
Additional reporting by Richard Cowan and Mark Felsenthal; Editing by Leslie Adler