The Federal Reserve has a dual mandate that requires them to boost employment, while moderating inflation. Fed critics have for a while now said that the Fed favours the inflation side of its mandate. Chicago Fed president Charles Evans is pushing for more equal weightage of both.
As the two-day FOMC meeting kicks off today, Societe Generale analyst Aneta Markowska says “the Fed is currently close to its inflation mandate, but miles away on the unemployment mandate; assigning equal weights and trying to minimize the overall miss strongly argues for further easing.”
Now here’s a chart that shows how the Fed has performed viz-a-viz its inflation and unemployment mandates in the last 50 years:
Photo: Societe Generale