WASHINGTON – Joint Economic Committee (JEC) Ranking Member Carolyn B. Maloney (D-N.Y.) Thursday criticized Republican efforts to hamstring the Federal Reserve’s (Fed) ability to independently conduct monetary policy.
Her comments came at a Committee hearing featuring Fed Chair Janet Yellen as the sole witness. Yellen’s appearance was the last time she is scheduled to speak publicly before the Fed meets on December 15-16 to decide whether to raise interest rates.
Maloney said legislation passed by Congress last month to eliminate the Fed’s ability to set interest rates according to a variety of economic indicators was misguided. The FORM Act “would fundamentally hamper the Fed’s ability to conduct monetary policy,” she said. “It would limit the Fed’s independence, for example, by forcing it to determine target interest rates using a mathematical formula.
“If the FORM act had been law during the time of the recession the Federal Reserve would not have been able to take the aggressive steps needed to help pull our nation out of the greatest economic catastrophe since the Great Depression.”
Since 2008, the Fed has set the interest rate at essentially zero in an effort to rescue the economy, spur growth and sustain our recovery from the Great Recession.
Maloney noted that during that time, unemployment has been cut in half, 13.5 million private-sector jobs have been created over a record 68 consecutive months and real Gross Domestic Product has increased by more than 14 percent since the second quarter of 2009.
The Fed’s actions, she said, “dramatically reduced the severity and length of the Great Recession” and demonstrate “the importance of an independent central bank, mostly insulated from political pressures.”
Without this unprecedented response the recession would have lasted twice as long, the unemployment rate would have reached nearly 16 percent, and the nation would have lost twice as many jobs— more than 17 million, according to a recent report by economists Alan Blinder and Mark Zandi.
Read Ranking Member Maloney’s full statement here.
Watch her on Youtube here.
See related charts here.
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