# Dual Mandate The **dual mandate** is the [[Federal Reserve]]'s statutory charge, codified at **12 U.S.C. § 225a**, to promote "maximum employment, stable prices, and moderate long-term interest rates." The third goal is generally treated as a consequence of the first two, so the mandate is described as dual rather than triple. The language arrived in the Federal Reserve Reform Act of 1977 and was reinforced by the Full Employment and Balanced Growth Act of 1978, better known as Humphrey-Hawkins. This distinguishes the Fed from most peer central banks: the [[European Central Bank]], for example, has a primary price-stability objective to which employment is subordinate. Neither goal is defined numerically in statute. The FOMC adopted an explicit **2 percent** inflation target in January 2012, measured on the personal consumption expenditures price index, and treats maximum employment as a level to be estimated rather than fixed. The two legs conflict whenever inflation is driven by a [[Supply Shock]] rather than excess demand, because the tool available — raising rates to suppress demand — hits employment on the way to prices. ## From statute to strategy | Year | Step | What it did | |---|---|---| | 1977 | Federal Reserve Reform Act, signed Nov 16 by [[Jimmy Carter]] | Wrote the three goals into law; required Senate confirmation of the chair and vice chair and semiannual hearings | | 1978 | Humphrey-Hawkins Act, Oct 27 | Reinforced the employment goal; required semiannual chair testimony | | 2012 | Statement on Longer-Run Goals, Jan 25 | First formal 2 percent target, on PCE prices — chosen by the FOMC, not Congress | | 2020 | Framework revision, Aug 27 | Flexible average inflation targeting; policy to respond to "shortfalls" of employment | | 2025 | Revised statement, Aug 22 (unanimous) | Dropped the make-up strategy and the "shortfalls" language; restored a "balanced approach" | The 2020 framework, written after a decade of below-target inflation, aimed for inflation "moderately above 2 percent for some time" after misses and meant the Fed would no longer tighten just because unemployment was low. The 2021–23 inflation overtook it. The 2025 revision dropped the overshoot pledge, said employment "may at times run above real-time assessments of maximum employment without necessarily creating risks to price stability," and restored a balanced approach when the goals conflict; Powell said the intentional overshoot "had proved irrelevant." ## The single-mandate alternative The [[European Central Bank]] is the standard contrast: under the EU treaties its primary objective is price stability, and support for wider economic policy comes second — a design traced to the Bundesbank and [[Ordoliberalism]]. Proposals to give the Fed the same single mandate recur on the right. The Federal Reserve chapter of the Heritage Foundation's [[Mandate for Leadership]] — the [[Project 2025]] blueprint — called to "eliminate the 'dual mandate'" and "focus the Federal Reserve on protecting the dollar and restraining inflation." Its author, Paul Winfree, was hired by [[Kevin Warsh]] as an adviser in June 2026. On September 16, 2025 House Financial Services Committee Chairman French Hill, with [[Byron Donalds]] and Marlin Stutzman, reintroduced the Price Stability Act (H.R. 5396), which would strike "maximum employment" from Section 2A of the [[Federal Reserve Act]]; it remained in committee as of May 2026. ## See also - [[Monetary Policy Transmission Flow]] · [[Interest Rate Policy Timeline]] - [[Supply Shock]] · [[Phillips Curve]] · [[Unemployment Rate]] · [[Natural Rate of Unemployment]] - [[Federal Reserve]] · [[Federal Open Market Committee]] · [[European Central Bank]] · [[Central Bank Independence]]