According to BlockBeats, Brij Khurana, a fixed-income portfolio manager at Wellington Management, has suggested that the Federal Reserve should reconsider its dual mandate of maximizing employment and stabilizing prices. The Fed updates its statement on this mandate every five years, with the last update occurring in 2020 during the COVID-19 pandemic, focusing on a long-term average inflation rate of 2%.
Khurana emphasized that when the Federal Reserve releases its next statement later this year, it should fundamentally rethink its dual mandate and realign monetary policy towards maximizing productivity. Since 2008, the annual growth rate of productivity in the United States has slowed to 1.6%, compared to 2.4% in the previous 18 years. By prioritizing the acceleration of productivity, the Federal Reserve could achieve its dual mandate goals without causing unintended negative consequences, such as increased income inequality and rising debt levels, both of which can hinder productivity. This approach would necessitate a revision of the dual mandate.