The Fed should redefine its dual mandate to focus on maximizing productivity.

[Coin World] On August 5 (UTC+8), Brij Khurana, the fixed income portfolio manager at Wellington Management, stated that the Fed plans to update its statement every five years to explain how it will achieve its dual mandate of maximum employment and price stability. The last time the Fed issued this statement was during the COVID-19 pandemic in 2020, when it adopted a framework focused on a long-term average inflation rate of 2%. When the Fed releases its next statement later this year, it should thoroughly reconsider the dual mandate and readjust monetary policy to aim for maximizing productivity. Since 2008, the annual growth rate of U.S. productivity has slowed to 1.6%, down from 2.4% in the previous 18 years. Focusing on re-accelerating productivity will enable the Fed to achieve its dual mandate goals without the unintended negative consequences it has caused, including increased income inequality and rising debt levels—both of which detract from productivity. This trajectory of development requires a revision of the dual mandate.