Question

In recent​ years, several members of Congress have sponsored bills that would subject the Fed to audits of its monetary policy. This is a form of intensive Congressional oversight. What are the pros and cons of more Congressional oversight of the​ Fed?

Increased oversight can

Answer 1

The Federal Reserve has advantages and disadvantages. Greater transparency and accountability are some of the benefits of having increased Congressional oversight. It can provide greater insight into the decisions made by the Fed, which can minimize concerns about its actions not aligning with the public's best interests. However, increased Congressional oversight can also result in political interference, which may cause Congress to influence monetary policy in ways that benefit their own interests rather than the economy as a whole. Thus, finding a balance between transparency and independence is essential for the Federal Reserve to serve the best interests of the economy and the public.