In his 1967 presidential address to the American Economic Association, he said, “we are in danger of assigning to monetary policy a larger role than it can perform, in danger of asking it to accomplish tasks that it cannot achieve, and as a result, in danger of preventing it from making the contribution that it is capable of making.” 2 In my view, the dual mandate has contributed to a view that monetary policy can accomplish far more than it is, perhaps, capable of achieving.
Even though the FOMC’s 2012 statement of objectives acknowledged that it is inappropriate to set a fixed goal for employment and that maximum employment is influenced by many factors, the FOMC’s recent policy statements have increasingly given the impression that it wants to achieve an employment goal as quickly as possible through aggressive monetary accommodation.