The Fed’s decisions must be independent of Congress, says Mester
The US Fed's Loretta Mester gives the all-clear for 2015 (Part 13 of 13)
Loretta Mester’s economic outlook for 2015
Loretta Mester, President and CEO of the Fourth District Federal Reserve Bank of Cleveland, outlined her outlook for economic growth and 2015 monetary policy at a speech in Ohio. She gave her assessment and made known her expectations regarding certain key indicators of the US economy:
growth
employment
inflation
banking regulation
the federal funds rate
The performance of popular ETFs such as the SPDR S&P 500 ETF Trust (SPY), the Vanguard Total Stock Market ETF (VTI), and the iShares S&P 500 ETF (IVV) reflects the course that the US economy is taking. The SPY is invested up to 3.9% in Apple (AAPL), up to 2.1% in ExxonMobil (XOM), and up to 1.9% in Microsoft Corp. (MSFT).
The Fed’s decisions are independent of Congress
During her speech, Mester stressed how important it was that the Fed’s decision-making process remain independent of Congress. Congress does indeed set the goals that the Fed is to achieve. Nevertheless, the Fed makes independent monetary policy decisions in pursuit of these goals. “Research has shown that when central banks formulate monetary policy free from government interference and are held accountable for their decisions, better economic outcomes result,” said Mester.
Auditing the Fed is uncalled for
As a follow-up to her point, Mester contended that auditing the Fed would open the door to allowing political considerations influence monetary policy decisions. This, she said, could hamper the country’s economic performance.
Read about what other Federal Reserve officials expect from 2015 in our series, Most regional Federal Reserve officials see a rate hike in 2015.
Browse this series on Market Realist:
