It Isn’t a Forecast (February 2012)
The Federal Reserve has a dual mandate to both maintain price stability and reasonably full employment at the same time. This differs from that of its counterparts in other countries, which focus primarily on fighting inflation. Because of this, the Fed’s monetary action are often overtly counter-cyclical, raising or lowering interest rates or tightening or loosening money and credit to try to fuel or slow economic growth. Read this note to understand the Fed’s role and reasons for its actions better.