Blog: The Fed's Dueling Mandates are a problem

The Fed's dual mandates of price stability and maximum employment have been in conflict for a while. A "soft landing" would satisfy both. But it's becoming more and more apparent that we can't have both price stability and low unemployment in the near term. These two mandates are now dueling with one another, and one of them has to give. If the Fed is serious about bringing inflation down to their 2% target then unemployment has to rise to reduce demand. It's hard to see any other outcome except re-accelerating inflation or stagflation if they decide to preserve employment.