Wall Street Journal: Fed's Dual Mandate to End, Focusing Exclusively on Inflation

According to a report by Nick Timiraos of The Wall Street Journal, the House Financial Services Committee is considering a major bill. The bill proposes to revise the Federal Reserve Act, eliminating the Federal Reserve's long-standing dual mandate of price stability and full employment, and simplifying its function to focus solely on price stability.

For a long time, the Federal Reserve has been tasked with finding a balance between promoting employment and curbing inflation. However, proponents of the bill argue that this multi-goal approach has led to the Federal Reserve's slow response to recent inflation crises and has made it highly susceptible to political pressure. By shifting to a single mandate, the Federal Reserve's decision-making logic will more closely resemble that of the European Central Bank.

Analysts point out that if the bill is ultimately approved, it will signify a fundamental reversal of the U.S. monetary policy framework. In the future, the Federal Reserve may no longer have a legal obligation to stimulate employment through rate cuts in the face of economic recession, and the market's sensitivity to employment indicators such as non-farm data will also decrease significantly.

At present, the bill is still under consideration within the House Financial Services Committee, and its passage in the Senate still faces significant resistance.