Goodfriend Tells Lawmakers He Backs Fed's Dual Mandate on Jobs, Prices

Federal Reserve nominee Marvin Goodfriend told lawmakers Tuesday he supports the central bank's dual mandate to maintain stable prices and pursue maximum employment, despite his past comments suggesting the Fed should focus on inflation.

Democrats pressed Mr. Goodfriend at his confirmation hearing to explain those comments, including remarks in 2012 in which he warned inflation could begin to rise dangerously if the Fed let the jobless rate fall below 7%. The unemployment rate in December was 4.1%, and inflation has continued to run below the Fed's 2% objective.

Mr. Goodfriend, a former Fed economist and a professor at Carnegie Mellon University, said his comments were "academic," and said he has argued that price stability is essential for the Fed to pursue stimulative policies to help lower unemployment.

"I totally support it," he said of the central bank's dual mandate, adding that he regretted referring to the dual mandate as "incoherent."

Sen. Bob Menendez (D., N.J.) suggested Mr. Goodfriend had experienced a "confirmation conversion." He asked whether Mr. Goodfriend thought the Fed should have followed his advice to begin raising short-term interest rates in 2012.

"No, I don't," he said, but added that his remarks were being taken out of context.

"The history and the thinking about monetary policy has said if we want to get unemployment down to the natural rate...we as central banks need to stabilize long-run inflation expectations," he said. "That's all I'm saying."

Write to Kate Davidson at kate.davidson@wsj.com

(END) Dow Jones Newswires

January 23, 2018 11:54 ET (16:54 GMT)