But the public also cares about the variability of output relative to potential, and the conduct of monetary policy inevitably will affect output variability. Therefore, in my view, the importance of keeping monetary policy focused on what it can do supports the case for a dual mandate that explicitly recognizes both price stability and output stabilization as objectives for monetary policy.
Is there a single long-run objective? It is sometimes argued, however, that price stability can be the only objective for monetary policy in the long run, again placing price stability on a higher plane than full employment. In the long run, theory holds that the economy gravitates to full employment by self-equilibrating forces, principally through the effects of price flexibility.