The Current State of the Economy As you know, the Congress has tasked the Federal Reserve with achieving stable prices and maximum employment--the dual mandate. Today, we are not far from achieving those goals. The Federal Open Market Committee (FOMC) has an objective of 2 percent for inflation, as measured by the annual change in the price index for personal consumption expenditures.
The Committee sees this objective as symmetrical, so that minor deviations above or below 2 percent are treated alike. 1 Inflation has consistently run below 2 percent since 2011, and is now at 1.2 percent over the past 12 months (figure 1). This headline measure of inflation has recently been held down by falling energy and food prices.