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Brainard: Modern monetary theory would pose risks in diminishing Fed's authority

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WASHINGTON, May 16 (Reuters) - The set of ideas known as Modern Monetary Theory could poses risks in shifting authority over the economy from the Federal Reserve to Congress or other institutions more tied to political considerations, Fed Governor Lael Brainard said on Thursday.

"Putting those responsibilities in an institution that has a lot of oversight but a little bit of independence - there are some virtues to that. And to the extent that moves to a different setting there may be risks," Brainard said.

MMT would depend on Congressional tax and spending decisions to meet the employment and inflation goals currently vested with the Fed, and its advocates, including some Democratic congressional candidates, argue it could finance expansive social programs. (Reporting by Howard Schneider)