Navigating Monetary Policy: Congressional Task Force to Review Fed's Approach

A newly formed congressional task force, critically examining the Federal Reserve's monetary policy approach, will hold its first public hearing on March 4. Set against a backdrop of high inflation, the task force will scrutinize the Fed's past decisions, particularly its response to pandemic-induced economic changes.

A congressional task force has been established to critically evaluate the U.S. Federal Reserve's approach to monetary policy. Initiated by the head of a powerful committee, the task force is scheduled for its inaugural public hearing on March 4. The hearing, under the banner "Examining Monetary Policy and Economic Opportunity," aims to inspect the central bank's strategies amid ongoing economic challenges.

This comes as the Fed undergoes a review of its operating framework, dictated by its dual mandate of enhancing price stability and promoting maximum employment. Committee Chairman French Hill criticized the Fed's delayed response to mounting inflation as the nation emerged from the pandemic-induced economic slowdown.

Since implementing a new framework in August 2020, prioritizing employment, inflation soared to unprecedented levels by early 2021. However, the Fed's decision to raise interest rates started only by March 2022. Hill highlighted this delay during an oversight hearing with Fed Chair Jerome Powell, indicating the current inflation strategy is unsuitable for the post-pandemic economic landscape.

(With inputs from agencies.)