House Financial Services Committee Chairman Jeb Hensarling (R-TX) delivered the following opening statement at today’s hearing with Federal Reserve Chair Janet Yellen on monetary policy and the state of the economy:
Since we last convened to take Chair Yellen’s testimony on monetary policy, there have been encouraging economic headlines. Confidence is up. Headline unemployment remains low, as does inflation. But the headline unemployment rate still rests too much on an incredibly low labor participation rate and, regrettably, high disability payment participation rates.
Both paychecks and savings for working Americans still have considerable room to grow after 8 years of distortionary economic policy under the previous administration.
Fortunately, on the fiscal front, help is on the way. House Republicans have passed both the American Health Care Act to lift the burden of Obamacare from our economy and the Financial CHOICE Act to end bank bailouts and unleash trillions of dollars of capital sitting on the economic sidelines due to Dodd-Frank. These are landmark pieces of legislation. In the months to come, the House will vote on a fairer, flatter, more competitive tax code that will undoubtedly bring us a far healthier and dynamic economy. And the Trump Administration is busy rolling back rules that harm our economy as well.
Monetary policy must do its part, as well. I am highly encouraged that Chair Yellen and her colleagues seem to be on a track toward monetary policy normalization. Keeping interest rates artificially low for too long was a key contributing factor to the last crisis. Let’s hope it does not prove to be a key contributing factor to the next.
What is most desirable for long-term economic growth is for the Fed to set out an easily discernable and transparent policy strategy to achieve its mandate and, but for highly exigent circumstances, to stick to it. Forays by the Fed into fiscal policy, specifically credit allocation, cannot and should not be permitted.