The Fed's Dual Mandate Conflict

We know that inflation is running higher than we're used to seeing. So what gives? Why does the Federal Reserve plan to keep short-term interest rates near zero and continue stimulating the economy? This week's video examines the other half of the Fed's dual mandate; maximum sustainable employment. While the U.S. unemployment rate has improved from last year, it is still above target levels.

Increasing inflation and elevated unemployment levels have created a conflict between the Fed's two mandates. Until the labor market improves and unemployment declines closer to target (likely sub 4.5%), the Fed will continue on the current path of keeping the interest rate low.

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