What is the primary aim of the U.S. monetary policy?
The primary goal of monetary policy in the United States has evolved since the creation of the Federal Reserve as the nation’s central bank. Originally intended to prevent the panicked bank runs of the late 19th century, monetary policy strives to promote stable employment and prices.HistoryA 1913 law created the Federal Reserve System (sometimes called “the Fed”) and directed it to help the U.S. economy avoid the panics of the late 1800s by acting as a “lender of last resort.”FunctionThe last update to the Federal Reserve’s mandate was in the late 1970s, according to the Federal Reserve Bank of San Francisco. That latest mandate required the Fed to maintain stable prices, moderate long-term interest rates and maximum employment.Expert InsightAccording to Federal Reserve Bank of San Francisco researchers, the goals of price stability and moderate long-term rates are related because stable prices often produce moderate interest rates.ConsiderationsSome level of unemployment, related to
