But, in the absence of favorable developments in the coming months, there will be a strong case for additional measures. Some have argued that monetary policy should do no more, and that the political branches of government should adopt fiscal or other policies to encourage increased economic activity and job creation.
I certainly do not disagree that well-conceived policies by other parts of the government could produce gains in employment, investment, and spending. But the absence of such policies cannot be an excuse for the Federal Reserve to ignore its own statutory mandate. The Federal Reserve Act requires that the FOMC promote the goals of maximum employment and stable prices.