I mentioned that the FOMC meets eight times per year. At those meetings, we decide on the level of monetary stimulus for the economy. I won’t get into too many details of what that term “monetary stimulus” means, although I’m sure that I’ll be taking questions about it later. What is the FOMC seeking to achieve by varying the level of monetary stimulus?
Congress has charged the FOMC with making monetary policy to promote price stability and to promote maximum employment. The FOMC has interpreted the first goal, price stability, to mean keeping inflation close to 2 percent. The FOMC’s job is to vary monetary stimulus over time to meet these mandated objectives.