Republican lawmakers on Thursday met with a senior Federal Reserve official who opposes the central bank's easy money policies to discuss stripping the Fed of its task of ensuring full employment.
After the meeting with Kansas City Federal Reserve Bank President Thomas Hoenig, the No. 3 Republican in the House of Representatives, Mike Pence, told reporters he continues to think the Fed should focus solely on fighting inflation.
Pence said last month that he planned to introduce legislation to change the Fed's mandate, which currently charges it with using monetary policy to achieve full employment as well as to keep inflation at bay. Sen. Bob Corker, an influential Republican on the Senate Banking Committee, has also backed the shift.
The proposal comes alongside domestic and international criticism over the U.S. central bank's plan to buy an additional $600 billion in government bonds to try to speed up a sluggish economic recovery.
Opponents, including a number of Republican lawmakers, worry the program will weaken the U.S. dollar and sow the seeds of inflation without doing much to lift economic growth and lower unemployment.
Many top Fed officials, including Chairman Ben Bernanke, have defended the action on the grounds that the economy is underperforming on both ends of the Fed's responsibilities with unemployment near 10 percent and inflation below the Fed's comfort zone.
Bernanke is expected to defend the bond-buying spree anew in an interview with the popular CBS newsmagazine show 60 Minutes on Sunday.
Hoenig is one of the most inflation-focused hawks on the Fed and has dissented at every Fed policy vote this year on the grounds easy money could fuel asset bubbles.
When asked whether he supports efforts to pare the Fed's mandate to maintaining price stability, his office pointed to an October speech in which he said: I am fully committed to the Federal Reserve's dual mandate to maintain long-run growth so as to promote effectively the goals of maximum employment, stable prices and moderate long-term interest rates.
Republican lawmakers have jumped to criticize the Fed's new stimulus effort since November elections swept them into control of the House.
Pence said members of Congress had wanted to talk to a policy-maker who also objects to the Fed's bond-buying plans, which are also referred to as QE2 because it is the second time the Fed has sought to lower rates by buying Treasuries, a tactic known as quantitative easing.
Based on upon his public statement and his dissenting views on QE2, Thomas Hoenig is a member of the ... central bank that shares our concerns about the prospect of inflation and we're grateful that he came by, Pence said.
Fed officials say the central bank would likely be pursuing its bond-buying program even if it only had a mandate to ensure price stability because policy makers worry that low levels of inflation risk tipping into a dangerous deflationary spiral.
However, the move to simplify the mandate has not encountered the same vehement Fed opposition that greeted failed congressional efforts earlier this year to subject the central bank's monetary policy decision-making to lawmaker review, which officials said would have compromised the central bank's independence.
When Pence and Corker announced their support for changing the mandate, a Fed spokeswoman said the central bank was not seeking a change and that the dual mandate was appropriate.