Chair Powell and other colleagues in the Federal Reserve System have pointed out that monetary policy affects the economy and inflation with long, variable, and highly uncertain lags, and we are still learning about the full effect of our tightening thus far. 22 Conclusion In conclusion, the Fed has a congressional mandate of maximum employment and price stability.
Monetary policy was tightened from mid-2002 up to mid-2003 due to inflationary pressures as the kina depreciated to an all time low. The recent fiscal discipline of the Government, improved international commodity prices and exports, and confidence in the macroeconomic management of the economy has seen a recovery in our economy.