What economic goals does the Federal Reserve seek to achieve through its monetary policy?
The Federal Reserve works to promote a strong U.S. economy. Specifically, Congress has assigned the Fed to conduct the nation's monetary policy to support the goals of maximum employment and stable prices. Those two goals are often referred to as the Fed's "dual mandate."
Maximum employment is the highest level of employment or lowest level of unemployment that the economy can sustain in a context of price stability. Durably achieving maximum employment fosters broad-based economic opportunities and benefits for all Americans.
Prices are considered stable when consumers and businesses do not have to worry about costs significantly rising or falling when making plans, or when borrowing or lending for long periods. The Federal Open Market Committee judges that an inflation rate of 2 percent over the longer run, as measured by the annual change in the price index for personal consumption expenditures, is most consistent with the Fed's price-stability mandate. When households and businesses can reasonably expect 2 percent inflation over the longer run, they are better able to make sound decisions regarding saving, borrowing, and investment, which contribute to a well-functioning economy and the well-being of all Americans.