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Federal Open Market Committee statements (June 25, 2008)

  • Economics


Statement on Longer-Run Goals and Monetary Policy Strategy Statement on Longer-Run Goals and Monetary Policy Strategy As amended effective January 28, 2014 The Federal Open Market Committee (FOMC) is firmly committed to fulfilling its statutory mandate from the Congress of pro­ moting maximum employment, stable prices, and moderate long-term interest rates. The Committee seeks to explain its monetary poli­ cy decisions to the public as clearly as possi­ ble. Such clarity facilitates well-informed decisionmaking by households and business­ es, reduces economic and financial uncertain­ ty, increases the effectiveness of monetary policy, and enhances transparency and ac­ countability, which are essential in a demo­ cratic society. Inflation, employment, and long-term inter­ est rates fluctuate over time in response to economic and financial disturbances. More­ over, monetary policy actions tend to influ­ ence economic activity and prices with a lag. Therefore, the Committee’s policy decisions reflect its longer-run goals, its medium-term outlook, and its assessments of the balance of risks, including risks to the financial system that could impede the attainment of the Com­ mittee’s goals. The inflation rate over the longer run is primarily determined by monetary policy, and hence the Committee has the ability to specify a longer-run goal for inflation. The Commit­ tee reaffirms its judgment that inflation at the rate of 2 percent, as measured by the annual change in the price index for personal con­ sumption expenditures, is most consistent over the longer run with the Federal Reserve’s statutory mandate. Communicating this infla­ tion goal clearly to the public helps keep longer-term inflation expectations firmly an­ chored, thereby fostering price stability and moderate long-term interest

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