What is the main purpose of the Federal Reserve's 'dual mandate'?

The main purpose of the Federal Reserve's 'dual mandate' is to achieve maximum employment and stable prices. This mandate reflects the Federal Reserve's commitment to fostering a healthy economy by focusing on two key objectives.

Maximum employment means the Fed aims to create conditions that allow as many people as possible to find work, which is essential for economic growth and individual well-being. Stable prices, on the other hand, refer to the goal of controlling inflation and maintaining price stability, which is crucial for preserving the purchasing power of consumers and ensuring a predictable economic environment. By balancing these two objectives, the Federal Reserve seeks to promote overall economic stability and growth, fostering a sound economic environment conducive to job creation and long-term financial health.

Understanding this dual mandate helps clarify the Federal Reserve's actions and responses to various economic conditions, as its policy decisions are primarily guided by the need to support employment and price stability in the economy.