BlockBeats news, on August 5, Brij Khurana, the fixed income portfolio manager at Wellington Management, stated that the Federal Reserve plans to update its statement every five years, explaining how it will achieve its dual mandate of maximum employment and price stability. The last time the Federal Reserve issued this statement was during the COVID-19 pandemic in 2020, when it adopted a framework focused on a long-term average inflation rate of 2%.
Later this year, when the Federal Reserve releases its next statement, it should thoroughly reconsider its dual mandate and realign monetary policy towards maximizing productivity. Since 2008, the annual growth rate of productivity in the U.S. has slowed to 1.6%, down from 2.4% in the previous 18 years. Focusing on re-accelerating productivity will enable the Federal Reserve to achieve its dual mandate goals without the unintended negative consequences it has caused, including increasing income inequality and rising debt levels—both of which reduce productivity. This trajectory of development requires a revision of the dual mandate. (Financial Times)