The House Financial Services Committee is conducting a hearing on monetary policy, treasury market resilience, and economic prosperity. The hearing is led by Task Force Chair Frank D. Lucas (OK-03). The focus of the session is to examine issues related to monetary policy, the Federal Reserve Act, and how these affect the financial well-being of Americans.
Task Force Chair Frank D. Lucas delivered his opening remarks emphasizing the significance of a healthy Treasury market and the role it plays in the economy. He noted that recent stresses in the market would be addressed with an aim to increase liquidity and stability.
Lucas highlighted three significant changes within the Federal Reserve System: “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.” He continued with concerns over “the growth of the Fed’s balance sheet” which peaked at nearly $9 trillion in 2022 following quantitative easing rounds. Lastly, he discussed “the Fed’s move in 2020 to their flexible average inflation targeting strategy— or FAIT.”
He expressed hope for discussions around these topics, particularly focusing on high inflation levels since FAIT’s announcement. Additionally, Lucas pointed out how Dodd-Frank’s expansion of regulatory authority has introduced political pressures that could threaten monetary policy independence.
In conclusion, Lucas emphasized Congress’ critical role in overseeing these developments as they directly impact all Americans’ economic well-being. He thanked Chairman Hill for establishing this Task Force and acknowledged Ranking Member Vargas for leadership collaboration.
