Prospects for Long-Term Sustainable Growth Must Not Be Overlooked (Rep. Paul Ryan)

Clearly, the Fed faces a particularly challenging environment right now. Americans have genuine, and legitimate, concern about the expectations of slower economic growth in the months ahead.

Last week, I held 15 listening sessions with my constituents back in Wisconsin. And – as I would imagine was the case in most Members’ districts – the economy was a key topic at every one of those meetings.

Lately, it seems clear the Fed has been focused on employment growth as its primary objective. We in Congress are focused on job growth as well, given that we have jurisdiction over fiscal policy. As such, we are all in the midst of discussing a short-term economic growth package. But the Fed has sole responsibility for monetary policy, and many would argue that the primary mandate of the Fed is price stability.

Data released yesterday showed that the consumer price index rose more than 4 percent last year, the largest annual increase since 1990. Oil prices have soared, food prices have increased, and just this week, the price of gold – a traditional hedge against inflation – jumped to a nominal all-time high. Meanwhile, the Fed’s softer monetary policy stance – and the prospect of future rate cuts – has contributed to a further decline in the dollar, which can raise import prices, further stoking inflation.

My concern is that these interest rate cuts could lead to even more inflation down the road – and history has shown that once inflation pressures are in the pipeline expectations change, and they can prove costly to deal with. The Fed risks having to put the brake on economic growth later on – via higher interest rates – in order to wring that inflation out of the system.

In considering our strategy for crafting an economic growth plan, there are several key principles we need to keep in mind:

First, Do No Harm. I am concerned that, in our rush to “help,

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