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Highlights
- Establishes maximum employment, price stability, and moderate interest rates as key economic goals.
- Requires the Federal Reserve to align monetary policy with national economic objectives.
- Mandates regular economic reporting to ensure accountability and progress tracking.
Overview
The Full Employment and Balanced Growth Act of 1978, commonly known as the Humphrey-Hawkins Act, is a landmark federal law aimed at shaping U.S. economic policy. Enacted to promote stable and sustainable economic growth, it sets forth clear national objectives, including full employment, price stability, and moderate long-term interest rates. The act reflects a strong commitment to reducing unemployment while keeping inflation under control.
One of the key provisions of the act is its requirement for the Federal Reserve to conduct monetary policy in alignment with these national goals. By maintaining a balance between employment growth and price stability, the act seeks to prevent economic overheating or prolonged downturns. Additionally, the act acknowledges the importance of moderate long-term interest rates, ensuring that borrowing costs remain manageable for businesses and consumers alike.
To enhance transparency and accountability, the Humphrey-Hawkins Act mandates regular reporting by the Federal Reserve and the President. The Federal Reserve Chair is required to testify before Congress twice a year, providing insights into economic conditions, policy actions, and future projections. This provision ensures that policymakers remain accountable for their economic strategies and adjustments.
Conclusion
The Full Employment and Balanced Growth Act of 1978 remains a significant piece of legislation guiding U.S. economic policy. By emphasizing employment, price stability, and reasonable interest rates, it seeks to balance economic growth with financial stability. While the act has evolved over time, its core principles continue to influence monetary and fiscal policy, reinforcing the nation’s long-term economic resilience.