House
passes bill calling for rule-based monetary policy
Send a link to a friend
[November 20, 2015]
WASHINGTON (Reuters) - The U.S.
House of Representatives on Thursday approved a bill that would make the
Federal Reserve set interest rate policy using a mathematical rule, a
proposal that has little chance of becoming law given a White House veto
threat.
|
The House approved the Fed Oversight Reform and Modernization Act
in a 241 to 185 vote thanks to overwhelming Republican support.
The bill is a sign of the deep suspicion many Republican lawmakers
hold against the U.S. central bank, which played a major role in
America's policy response to fight the 2007-09 recession.
Conservative lawmakers worry the Fed's policies, which included
pumping trillions of dollars into the banking system and slashing
its benchmark interest rate to near zero, could inflate bubbles in
the economy and lead to high inflation.
![](http://archives.lincolndailynews.com/2015/Nov/20/images/ads/current/pest_control_bch_092414.png) The proposal now passes to the Senate where Obama's Democrats have
the ability to stop most legislation despite being in the minority.
It has nonetheless prompted a host of Fed policymakers to air their
concerns.
Fed Chair Janet Yellen said this week the bill would severely damage
the U.S. economy and curtail Fed independence. The Obama
administration opposes the proposal because it believes it would
hinder the Fed's ability to fight recessions.
Under the type of policy rule envisioned by lawmakers, the Fed would
commit to moving interest rates up or down depending on the readings
of economic indicators like the jobless rate and inflation. The rule
adopted would be made public and any deviation from it would lead to
a congressional audit.
[to top of second column] |
![](http://archives.lincolndailynews.com/2015/Nov/20/images/ads/current/Symphony_lda_091814.png)
"If the Federal Reserve explained to the public how it made its
decisions ... families could better plan for the future," Speaker of
the House Paul Ryan, a Republican, said.
In a letter Ryan on Tuesday, Yellen argued that policymakers do not
understand the economy well enough to come up with a rule that would
reliably guide the economy through its ups and downs.
(Reporting by Jason Lange and David Lawder; Editing by Chizu
Nomiyama)
[© 2015 Thomson Reuters. All rights
reserved.]
Copyright 2015 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
![](http://archives.lincolndailynews.com/2015/Nov/20/images/ads/current/directory_buttons.png)
![](http://archives.lincolndailynews.com/2015/Nov/20/images/ads/current/LINCOLN_theater_011411.png) |