Journal Article

Achieving price stability: a 1993 report card

Abstract: The primary goal of Federal Reserve monetary policy is to foster maximum sustainable growth in the U.S. economy by achieving price stability over time. Although considerable progress toward price stability has been made since the early 1980s, inflation remains above the level most analysts would associate with price stability. Because price stability is the key contribution the Federal Reserve can make toward maximizing long-run growth and living standards in the United States, it is important for the Federal Reserve to remain vigilant in its efforts to keep inflation in check.> Kahn examines the behavior of inflation over the past year in relation to the Federal Reserve's goal of achieving price stability over time. First, he discusses why price stability is important and how the Federal Reserve has made significant progress toward price stability since the early 1980s. Second, he describes the behavior of inflation in 1993, showing that inflation declined for the year as a whole. Third, he shows that inflation expectations also declined in 1993, suggesting the public believes the inflation outlook has improved. Together, these findings suggest the Federal Reserve made progress in 1993 toward achieving price stability.

Keywords: Inflation (Finance); Prices; Monetary policy - United States;

Bibliographic Information

Provider: Federal Reserve Bank of Kansas City

Part of Series: Economic Review

Publication Date: 1994

Volume: 79

Issue: Q I

Pages: 5-18