Analyst: The Federal Reserve should adjust its dual mission objectives and readjust monetary policy

BlockBeats news, on August 5th, Brij Khurana, fixed income portfolio manager at Wellington Management, stated that the Federal Reserve plans to update its statement every five years to explain how it will achieve its dual mission of maximizing employment and stabilizing prices. The last time the Federal Reserve issued this statement was during the COVID-19 pandemic in 2020, when it adopted a framework focusing on the long-term average inflation rate of 2%. Later this year, when the Federal Reserve issues its next statement, it should thoroughly reconsider its dual mission and readjust its monetary policy towards maximizing productivity. Since 2008, the annual productivity growth rate in the United States has slowed down to 1.6%, lower than the 2.4% in the previous 18 years. Focusing on re accelerating productivity will enable the Federal Reserve to achieve its dual mission goals without causing unexpected negative consequences, including increased income inequality and rising debt levels - both of which will lower productivity. This development trajectory requires a revision of the dual mission. (Financial Times)