Republican Senator Bob Corker called for Congress to consider narrowing the Federal Reserve’s mandate to stabilizing prices and said Congress should consider setting a target for inflation.
Corker, who met yesterday with Fed Chairman Ben Bernanke, said today in an interview the Fed’s dual role of fighting inflation and maintaining full employment “can create sort of a bipolar mentality as it relates to the Fed” that’s “confusing to the market.”
The Tennessee senator, a member of the Senate Banking Committee, said his proposal would not prevent the Fed from addressing any threat of deflation or its program to buy $600 billion in Treasuries. The Fed cited low inflation for its decision to buy government debt securities to inject money into the lagging U.S. economy.
Congress should consider voting to set inflation targets because the Fed’s actions can cause “a lot of confusion for all concerned” he said. “The next question, do we actually vote on the Senate floor” on “an actual target for inflation?” Corker said.
“My sense is that might be a very good idea,” he said. “I am going to be talking to colleagues” about it, he said. “But minimally changing the mandate to price stability is a step in the right direction.”
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