U.S. News: For Yellen, Fed's Dual Mandate Guides Thinking
When senators question Janet Yellen on Thursday during her confirmation hearing to be the next leader of the Federal Reserve, she will likely turn their attention to the central bank's "dual mandate" of maximum employment and stable prices.</br></br>Ms. Yellen has made this mandate the centerpiece of her argument for the Fed's unconventional easy-money programs aimed at spurring a stronger economic recovery and lowering unemployment, a point her recent comments suggest she will seek to reinforce.</br></br>"While we have made progress, we have further to go," Ms. Yellen said of the Fed's role in helping the economy when President Barack Obama named her as his pick last month. "The mandate of the Federal Reserve is to serve all the American people, and too many Americans still can't find a job and worry how they'll pay their bills," she said, adding that the Fed can also ensure inflation doesn't undermine "the benefits of a growing economy."</br></br>The Fed's dual mandate was established in 1977, when Congress wrote into the Federal Reserve Act that the central bank must pursue both maximum employment and stable prices.</br></br>It is a controversial requirement in political circles because some Republicans think the employment component has taken the Fed's focus off the more important and achievable mission of low inflation. It is also unlike the mission of many other central banks, for which controlling inflation is the sole focus.