The Fed Is Failing Its Mandate, But It Could Change Soon Authored by Daniel Lacalle, The Federal Reserve’s legal mandate is clear. It must focus on stable prices and maximum employment. In the past five years, the Fed has failed on both. Inflation remains materially above the 2 percent target, reaching a decade-high 25% cumulative inflation in the 2021-2025 period, while restrictive monetary conditions have been limited to rate hikes, which weigh most heavily on the small and medium-sized firms that generate most of net employment growth. This failure was not merely a matter of missing a forecast but a policy framework that became narrative-driven rather than data-dependent. The Fed spent much of 2025 moving between...
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