For Better or Worse, Fed Is Just Doing Its Job
The Federal Reserve's actions over the past four years have been fully consistent with its mandate to guard against inflation and promote the prosperity of the U.S. economy and the stability of our financial system.
The Federal Reserve System was established by an act of
-- Conduct of U.S. monetary policy in pursuit of maximum employment, stable prices, and moderate long-term interest rates.
-- Supervision and regulation of U.S. banks to ensure their safety and soundness.
-- Maintenance of the stability of the financial system and limiting systemic risks in financial markets.
-- Provision of services to the financial system including the U.S. payments system.
The actions of the Board of Governors of the Federal Reserve System and the Federal Open Market Committee since the summer of 2007 have been derived from this four-part mandate and the powers granted by the
Most of the Federal Reserve's actions--such as the large-scale asset purchase program known as quantitative easing two (QE2)--were conventional in nature even if they were unusual in how they achieved their effects. A few measures adopted by the Federal Reserve were unconventional and involved the exercise of seldom-used powers.
One can disagree with the content of some Federal Reserve decisions or question their effectiveness without doubting whether they fell under the Federal Reserve's mandate. Each decision, along with its underlying legal authority, was debated within the Federal Reserve. In the end, each was adopted either unanimously or by a substantial majority by the relevant Federal Reserve decision-making body. However, no one should doubt the dedication and sincerity of Federal Reserve decision makers in acting in a manner consistent with their understanding of the Federal Reserve's mandate and their obligations under the Federal Reserve Act.
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