The Fed Versus Price Stability

There is a big difference between the US Federal Reserve’s mandate to maintain “stable prices” – as enunciated in the Federal Reserve Act – and the Fed’s self-selected target of 2% annual inflation. So how is it that policymakers have managed to substitute the latter for the former?

SAN FRANCISCO – There is a big difference between the Federal Reserve’s mandate to maintain “stable prices” – as enunciated in the Federal Reserve Act – and the Fed’s self-selected target of 2% annual inflation. So how is it that policymakers have managed to substitute the latter for the former?

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