Jim Bianco, Columnist

The Fed’s Dual Mandate Is Outdated

The Federal Reserve Reform Act of 1977 promoting maximum employment and stable prices no longer makes sense in an information-age economy.

April 23, 2019 at 5:00 PM UTC

By Jim Bianco

Jim Bianco is the President and founder of Bianco Research, a provider of data-driven insights into the global economy and financial markets. He may have a stake in the areas he writes about.

It’s time to revisit the Fed’s mission.
Photographer: Chip Somodevilla/Getty Images North America

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Most everybody seems to be wondering what’s happened to U.S. inflation and why it hasn’t returned in any meaningful ways as suggested by the economic models. The answer matters to the Federal Reserve’s unique status as a central bank with a rare “dual mandate” of maximum employment and stable prices.

The evidence is mounting that this dual mandate is clouding the Fed’s judgment, especially at a time when the relationship between inflation and employment is being openly questioned. Congress has changed the mandate before, and maybe it should do so again. Perhaps Congress can give the Fed a mandate of full employment and financial stability, or a mandate of low inflation and financial stability. But juggling employment and inflation at the same time is becoming more and more problematic.