Fed props up the economy, but officials urge Congress to shoulder its share of the burden
By Martha C. White
The Federal Reserve will make no change to its benchmark interest rate, the central bank announced Thursday at the conclusion of its two-day monetary policymaking meeting….“Ever since the pandemic struck in March, the Fed has been transformed into a quasi-fiscal agent of the U.S. government,” said Karen Shaw Petrou, co-founder of consulting and analysis firm Federal Financial Analytics. “The Fed decided to take on this huge, unprecedented role to reduce the pandemic’s macroeconomic destruction.” “The Fed could take a bigger role, but the more it does this, the more it just becomes an arm of the Treasury — and more political.” “Without a new fiscal stimulus bill, the Fed could take a still bigger role,” Petrou said, but she warned that this could compromise the central bank’s vaunted independence. “The more it does this, the more it’s just an arm of the Treasury and… the more political it is sure to become,” she said.