n mid-2017, an article in the Wall Street Journal noted that: "The Federal Reserve's interest-rate increases aren't having the desired effect of cooling off Wall Street's hot streak ... where stocks have rallied to records this year ... " Source: David Harrison, "Fed's Effort to Guide Markets Falls," Wall Street Journal , June 11, 2017. Is cooling off rapid increases in stock prices part of the Fed's dual mandate?

Question

Kamila Velez

Business

26 February, 18:19

n mid-2017, an article in the Wall Street Journal noted that: "The Federal Reserve's interest-rate increases aren't having the desired effect of cooling off Wall Street's hot streak ... where stocks have rallied to records this year ... " Source: David Harrison, "Fed's Effort to Guide Markets Falls," Wall Street Journal , June 11, 2017. Is cooling off rapid increases in stock prices part of the Fed's dual mandate?

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Answers (1)

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Summer James · Answer 1

No

Explanation:

When Congress enacted the Federal Reserve Act in 1913, they stated the FED's mandates:

promote maximum employment promote stable price

The FED's main objective is to conduct monetary policy in order to stabilize the economy and promote economic growth.

By stabilizing the economy the FED will lower inflation rate, therefore stabilizing prices. When the FED promotes economic growth, the unemployment rate should decrease, hopefully reaching a full employment.