The U.S. House Financial Services Committee convened a Task Force on Monetary Policy, Treasury Market Resilience, and Economic Prosperity hearing to revisit the purpose of the 1951 Treasury Fed Accord and how it shaped modern central banking. In opening remarks prepared for delivery, Task Force Chairman Frank Lucas said he intends to introduce a resolution calling for a formal dialogue between the Department of the Treasury and the Federal Reserve on the boundaries of their authority and on where more communication could support Treasury market resilience while reinforcing monetary policy independence. Lucas framed the 1951 accord as clarifying that the Federal Reserve is responsible for monetary policy consistent with its dual mandate, while the Treasury is responsible for funding the government at the least cost to the taxpayer over time. He pointed to a rise in the deficit to GDP ratio from less than 2% to nearly 6% and argued the Treasury market cannot function well if Treasury supply outpaces market capacity to absorb it, citing Federal Reserve Chair Jerome Powell’s repeated warning that the country is on an “unsustainable fiscal path.” The remarks also highlighted the Federal Reserve’s move to an ample reserves regime and four rounds of quantitative easing that expanded the balance sheet, and suggested that more forward communication with Treasury around quantitative easing, quantitative tightening, and reserve management purchases could improve coordination without jeopardizing independence or stoking inflation; Lucas also referenced a 2009 joint Treasury Fed statement that left credit allocation to fiscal authorities. The planned resolution is positioned as a vehicle for Congress to express the need for the Fed and Treasury to engage in this formal dialogue, with the hearing intended to inform that discussion through testimony from expert witnesses.

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