The accord reestablished the Federal Reserve’s ability to freely set interest rates, but with active consultation between the Fed and Treasury. It was only by the amendment of the Federal Reserve Act in 1977 that the Fed’s current objectives of maximum employment and stable prices were specified by the Congress.
10 A clear mandate of this kind is a key pillar of central bank independence. Over the years, a consensus developed among U.S. political leaders that the Federal Reserve’s independence in making monetary policy is critical to the nation’s prosperity and economic stability.