The White House on Tuesday issued a veto threat for a Republican-backed bill to make the Federal Reserve set interest rate policy using a mathematical rule, a proposal Fed Chair Janet Yellen said would “severely damage” the U.S. economy.
The Obama administration opposes the proposal because it would hinder the Fed’s ability to help the economy, the White House said in a statement.
“If the president were presented with (the legislation), his senior advisors would recommend that he veto the bill,” the statement said.
Lawmakers in the U.S. House of Representatives cleared the way on Tuesday for vote on the bill, called the Fed Oversight Reform and Modernization Act, as soon as Wednesday.
The proposal, which could pass the Republican-controlled house, is not expected to become law but has nonetheless prompted a host of Fed policymakers to air their concerns.
Under the type of policy rule envisioned by lawmakers, the Fed would commit to moving interest rates up or down depending on the readings of economic indicators like the jobless rate and inflation.
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