Investing.com -- A newly formed congressional panel is preparing to enhance Capitol Hill's supervision of the Federal Reserve. The panel has announced plans to conduct a comprehensive review of the U.S. central bank's interest rate decision-making process. This includes examining whether the focus should be more on controlling inflation or ensuring employment security.

The head of the panel, Representative Frank Lucas, an Oklahoma Republican, stated in an interview on Monday that many of his colleagues in the Financial Services Committee, including the chairman, are keen to discuss this issue. The key question being asked is whether the Federal Reserve should follow a dual mandate and how this impacts its primary mandate of price stability.

According to Lucas, if the primary focus is price stability, a more rules-focused process provides certainty to economic decision-making. However, he also recognized the challenges in amending the Federal Reserve Act due to narrow Republican majorities in both the House and Senate, and the nearly 50-year history of the dual mandate.

Despite these hurdles, Lucas anticipates his process could lead to suggested legislation, a series of reports, or recommendations to the Federal Reserve. This comes at an opportune time, as the Federal Reserve is currently reviewing its operating framework. This framework, since 2020, has increased its focus on unemployment, which some argue has slowed its response to price pressures that started to rise in 2021.

Lucas emphasized that these issues are presently relevant. In addition to monetary policy, the panel, which consists of eight Republicans and six Democrats, will also examine issues related to the functioning of the U.S. Treasury market.

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