In mid-2019, an article in the Wall Street Journal quoted an investment analyst as stating that "heightened expectations of a

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2 years ago

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In mid-2019, an article in the Wall Street Journal quoted an investment analyst as stating that "heightened expectations of a

[federal funds] rate cut may now force the Fed to act sooner than intended to avoid disappointing the market and driving up stocks' volatility over the summer." Source: Jessica Menton and Nathan Allen, "U.S. Stocks Edge Lower, Extending Losses," Wall Street Journal, June 12, 2019. Is avoiding volatility part of the Fed's dual mandate?

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1 answer:

Fed [463] · Answer 1 · 2022-10-06T02:07:36+03:00

Answer: B. No, this is not part of the Fed's dual mandate of price stability and high employment.

Explanation:

For any economy to grow there needs to be price stability in the economy as it helps investors plan their future spending amongst other things. This is why the Fed has the mandate to keep prices stable.

The Fed however, does not have to maintain the stability of prices in the stock market which can be a very volatile market where the volatility is one of the very ways to make gains.

In​ mid-2019, an article in the Wall Street Journal quoted an investment analyst as stating that​ "heightened expectations of a​

In mid-2019, an article in the Wall Street Journal quoted an investment analyst as stating that "heightened expectations of a