Tales From the Fed: Rivlin on Fed Independence
Paul Solman: Tonight on the NewsHour, we’re airing a piece exploring the suspicions some people have about the Federal Reserve and the the Fed’s efforts to be more transparent.
Amid all the talk of auditing the Fed or having Congress rein in some of the Fed’s proposed new authority under Obama’s regulatory reform plan, I asked former Fed Vice Chair Alice Rivlin this question: “What’s wrong with making the Fed into an agency of Congress?” Her response (which you can watch below):
Alice Rivlin: We need a central bank that’s willing to raise interest rates when it fears that the economy is overheated. That’s not a popular thing to do and it was for that reason that they gave it to an independent agency that can’t be told what to do by the Congress or the President or anybody else.
More interesting snippets from the extended interview below: what happens when the the press and financial markets parse every statement Fed officials make for meaning.