Question

What are the Federal Reserve’s goals and who established them? How are Fed officials held accountable for meeting them? Explain why the Chair is most influential Fed official.

Answer 1

Federal Reserve's goals are numerated below which were established by the Congress:

1. to maintain the long term growth rate of the economy via monetary and credit measures,

2. aligning the growth rate with the long run production potential of the economy

3. effectively establish the goals of stable prices in the economy

4. maximum employment, moderate long term interest rates

Fed officials held accountable for meeting them in the following way:

They release relevant information in large numbers to ensure accountability toward achievement of the goals

As per the FOMC meetings, the target interest rates are released shortly along with a brief statement;

Minutes of the meetings are subsequently made public to ensure transparency amongst the public

Chair of Fed reports to Congress twice a year to discuss developments.

Chair is most influential Fed official because he supervises the staff of Board of Governors who produce material to be distributed to Committee members before a meeting, he has control over the basic agenda of the FOMC meeting, also, he is the first Fed official to make any policy recommendation