Briefing
Trade-offs in Fulfilling the Fed’s Dual Mandate
Abstract: This article discusses the trade-offs and impacts of inflationary environments given the dual mandate of the Federal Reserve. High inflation creates pricing distortions and leads to a tax on liquidity. Furthermore, it has direct redistributive impacts of inflation on wages, portfolios and contracts that are preset in dollar terms. The analysis concludes that while inflationary trade-offs are complex, keeping expectations anchored is a paramount objective for the Fed, since unanchored expectations make all the other trade-offs harder to navigate.
Keywords: Dual mandate; inflation; maximum employment; inflationary trade-offs;
Access Documents
File(s):
File format is text/html
https://www.richmondfed.org/publications/research/economic_brief/2023/eb_23-08
Description: Briefing
Authors
Bibliographic Information
Provider: Federal Reserve Bank of Richmond
Part of Series: Richmond Fed Economic Brief
Publication Date: 2023-03
Volume: 23
Issue: 08