Corker introduces bill telling Fed to deal with price stability, not unemployment

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.”

Corker said that the Fed has purchased nearly $3 trillion-worth of federal assets by buying U.S. debts since Congress issued a dual mandate for the Fed to deal with both unemployment and price stability. Corker added that the best way to reduce unemployment numbers in the long-term would be to provide market stability, thus the language on unemployment in the Congressional mandate is unnecessary.

Republicans have said that the Fed is using the “maximum employment” clause in the dual mandate from Congress as an excuse to back U.S. borrowing by buying government bonds. Corker said this action would result in the government losing money on these assets in the long-run.

“I’ve long argued that the Fed should just focus on inflation,” Vitter said in a news release Monday. “With endless stimulus-type initiatives coming out of the Fed and the money printing press never ending — all under the banner of helping boost employment — the Federal Reserve should get back to its original goal. This policy strives to do just that.”

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