Express
Analyst: The Fed Should Adjust Its Dual Mandate Goals and Realign Monetary Policy
Summary: Brij Khurana, fixed income portfolio manager at Wellington Management, suggests that the Fed plans to update its statement every 5 years to outline how it will achieve its dual mandate of maximizing employment and maintaining price stability. The Fed last issued this statement during the 2020 pandemic, focusing on a 2% long-term average inflation rate. ...
Brij Khurana, fixed income portfolio manager at Wellington Management, suggests that the Fed plans to update its statement every 5 years to outline how it will achieve its dual mandate of maximizing employment and maintaining price stability. The Fed last issued this statement during the 2020 pandemic, focusing on a 2% long-term average inflation rate. When the Fed releases its next statement later this year, it should thoroughly reconsider its dual mandate and realign monetary policy towards maximizing productivity. Since 2008, U.S. productivity growth has slowed to 1.6% annually, below the previous 18-year average of 2.4%. Emphasizing a reacceleration of productivity will allow the Fed to achieve its dual mandate goals without unintended negative consequences such as worsening income inequality and rising debt levels, both of which can lower productivity. This trajectory requires a revision of the dual mandate. (Financial Times)
Tags:
Link: Analyst: The Fed Should Adjust Its Dual Mandate Goals and Realign Monetary Policy [Copy]
