Of course, the Federal Reserve System, and in particular the Federal Open Market Committee, treats each part of this congressional mandate with utmost seriousness. Because the Fed appears to an increasing degree to be following a policy of what I have called constrained discretion, one must ask: Is this policy approach consistent with the Congress’s mandate for monetary policy? My answer is absolutely yes.
In my view, this policy framework achieves each of the goals set by the Congress with greater consistency and effectiveness than any alternative of which I am aware. Broadly, there are three reasons why successful monetary policy is built on a foundation of price stability, as implied by the framework of constrained discretion.