What does the revised statement say about financial stability?
In August 2020 , Powell noted the trend that in recent years, “a series of historically long expansions had been more likely to end with episodes of financial instability, prompting essential efforts to substantially increase the strength and resilience of the financial system.”
Given this history, the new statement explicitly addresses financial stability concerns as an important part of the Fed’s mandate. “[S]ustainably achieving maximum employment and price stability depends on a stable financial system. Therefore, the Committee’s policy decisions reflect its longer-run goals, its medium-term outlook, and its assessments of the balance of risks, including risks to the financial system that could impede the attainment of the Committee’s goals.”
This change elevates financial stability in the Fed’s hierarchy of goals and suggests that, depending on the circumstances, th