Janet Yellen: FRB: Press Release--Statement by Federal Reserve Board Vice Chair Yellen on her nomination by President Obama--October 9, 2013:
"...I pledge to do my utmost to keep that trust and meet the great responsibilities that Congress has entrusted to the Federal Reserve--to promote maximum employment, stable prices, and a strong and stable financial system."Grasping Reality with Every Possible Tentacle
So Now the Federal Reserve Has a Triple Mandate: Good to Know
J. Bradford DeLong | Professor of Economics, UCAL Berkeley
Well, at least she is clear on who she is working for.
12 comments:
I like the order in which she stated them
I'm tellin' ya this guy Delong is going to come out of this with his reputation intact... good catch here.
Here from the FRA:
"The Board of Governors of the Federal Reserve System and the Federal Open Market Committee shall maintain long run growth of the monetary and credit aggregates commensurate with the economy's long run potential to increase production, so as to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates."
She has substituted the regulatory stuff for "moderate long term interest rates"... Freudian slip and we are looking at permanent ZIRP???
I think it is going to be interesting to watch how she deals with her monetarism... will she dig in deeper or will she moderate her monetarist views... Bernanke was 110% monetarist and made no bones about it, NEVER moderated....
rsp,
isn't the third one supposed to be "moderate long-term interest rates?"
"The Congress established the statutory objectives for monetary policy--maximum employment, stable prices, and moderate long-term interest rates--in the Federal Reserve Act."
http://www.federalreserve.gov/faqs/money_12848.htm
right, exactly what you just said.
a strong and stable financial system
Could mean that she recognizes the need for closer regulatory supervision and tighter rules.
What is called the Fed's dual mandate is actually, as noted, a triple mandate, and y is correct that the third component is moderate long-term interest rates - but that's only from the part of the Federal Reserve Act just lays out the Fed's monetary policy role, which is the role economists these days tend to seize on when they're arguing about the latest monetary policy fads. The Fed has a very large number of additional responsibilities. One might just as well say the Fed has a "20 part mandate".
Here's the whole current Federal Reserve Act:
http://www.federalreserve.gov/aboutthefed/fract.htm
isn't the third one supposed to be "moderate long-term interest rates?"
Define "moderate long term interest rates".
not too high ;)
"moderate l-t rate? generally means not so high as to depress investment and retard growth, and not as low as to produce rising malinvestment and financial instability.
The Fed was criticized for keeping rates "too low too long," contributing to the housing bubble.
Tom, Greenspan would quibble with that characterization. Remember his interest rate conundrum? :)
It wasn't the "savings glut" or "interest rate conundrum", as Greenspan spun, it was the failure to act as chief regulator on the neoliberal belief that capitalism is self-regulating.
See Bill McBride on Greenspan's interest rate conundrum.
Janet Yellin says she gets that.
And I just thought Yellen's 3rd phrase was inherent in her 2nd phrase?
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