Lucas: Congress' Attention to Monetary Policy is Crucial As We Know the Actions of the Fed Directly Impact the Economic Well-Being of All Americans
Washington,
March 4, 2025 -
Today, the House Financial Services Committee is holding a Monetary Policy, Treasury Market Resilience, and Economic Prosperity Task Force hearing, led by Task Force Chair Frank D. Lucas (OK-03), to explore monetary policy and economic opportunity.
Read Task Force Chair Lucas’ opening remarks as prepared for delivery:
"Welcome to the first hearing of the Task Force on Monetary Policy, Treasury Market Resilience, and Economic Prosperity.
"Our Task Force is charged with examining issues related to monetary policy, the Federal Reserve Act, and how economic growth and price stability affect the financial well-being of all Americans. All of which we’ll discuss today.
"The Task Force will also focus on the fundamental role that U.S. Treasury debt plays in our economy and the resilience of the Treasury market.
"It's ipossible to overstate the importance of a healthy Treasury market, and we’ll pay special attention to the recent stresses the market has faced and how to increase liquidity and stability for the market and its participants.
"But today, we’ll focus on monetary policy— how the Fed controls the money supply and interest rates— and why it matters to everyone in this country.
"The Fed uses interest rates, its open market operations, its reserve requirements— a whole host of policy tools— to stimulate the economy or cool it down.
"While our constituents may not monitor the actions of the Fed on a daily basis, they all feel the squeeze when inflation runs rampant, and their dollar doesn’t go as far at the grocery store or the gas pump.
"That’s why it’s important that the Fed gets it right. From the first central bank in 1791 to the Federal Reserve System we have today, the bank has evolved as the country has. Three recent changes are worthy of focus today.
"First, the Fed’s move to the ample reserves regime forced the Fed to use administered rates rather than the supply of bank reserves to steer policy.
"Second, the growth of the Fed’s balance sheet.
"The four rounds of quantitative easing over the past 20 years have expanded the Fed’s balance sheet — peaking at nearly $9 trillion in 2022. We’ll hear about this today as the Fed now engages in quantitative tightening.
"Third, the Fed’s move in 2020 to their flexible average inflation targeting strategy— or FAIT. This strategy tolerates high inflation after periods of low inflation.
"I hope to discuss the effectiveness of this strategy considering the stubbornly high inflation we’ve felt since FAIT was announced.
"Finally, Dodd-Frank’s considerable expansion of the Fed’s regulatory and supervisory authority has exposed the Fed to more political pressures, threatening its monetary policy independence.
"The Fed enjoys broad independence in its implementation of monetary policy, but it is not unaccountable to Congress for its actions— particularly as we see the remarkable changes I just described.
"I hope our conversation today will be insightful to the Fed as it’s wrapping up the 5-year review of its framework.
"The Federal Reserve System is an ongoing project.
"Congress’ attention to this work is crucial as we know the actions of the Fed directly impact the economic well-being of all Americans.
"I want to thank Chairman Hill for creating this Task Force and Ranking Member Vargas for leading with me. I look forward to our work together."
