The Federal Reserve is said to have a dual mandate of price stability and full employment. While the Fed has mentioned price stability as one of its primary goals, it has been reluctant to mention employment as a separate policy objective, preferring instead to state that maximum employment...

The sale of typical securities would force the Fed to contract its lending programs, whereas the sale of Fed bills would not.

Current excess reserves could create a massive increase in the money supply if banks significantly increase their lending or investing.

The FOMC’s two-pronged approach involves a potential conflict: forward guidance assumes a high degree of substitutability across the maturity structure, while quantitative easing assumes a low degree.

With its interest rate instrument at the zero lower bound, the Federal Open Market Committee has turned to unconventional methods to stimulate economic growth and increase employment. Prominent among these is quantitative easing (QE)—the purchase of a large quantity of longer-term debt....

The Federal Reserve is not formally inflation targeting. Nevertheless, it is commonly believed to be an implicit inflation targeter. The evolution to inflation targeting occurred because central banks, most importantly the Federal Reserve, demonstrated that monetary policy could control...

Policymakers should not think of price stability and economic stability as competing objectives but as complements - the best way to achieve the latter is to be firmly committed to achieving the former.

Market interest rates respond to discount rate changes. What is the reason for this response. This paper investigates several competing hypotheses of why markets respond to discount rate changes. Evidence that the response is invariant to changes in the Federal Reserve's operating procedure...