House task force opens review of Fed framework; members debate independence, dual mandate and balance-sheet tools

A House Financial Services task force led by Chairman Lucas opened its review of the Federal Reserve's monetary policy framework at a hearing in Washington, where members and expert witnesses disagreed over how much discretion the Fed should have and how its tools affect inflation, markets and households.

Lawmakers said the review is timely because Fed actions shape mortgage rates, wages and inflation expectations. Ranking Member Vargas emphasized preserving the Fed's dual mandate — maximum employment and stable prices — and protecting the central bank's independence from short‑term political pressure. "The Fed's dual mandate was established in 1977," Vargas said, and "maximum employment should not be on the chopping block." He added that Congress must defend the Fed's independence even as it conducts oversight.

Former Federal Reserve official Donald Cone told the panel that independence carries a corresponding responsibility: "With a high degree of policy independence, however, comes responsibility of the Federal Reserve to clearly explain what it is doing and why," he said. Cone and other witnesses urged clearer…