I 

108TH CONGRESS 

1ST SESSION H. R. 2547

To mandate price stability as the primary goal of the monetary policy of 

the Board of Governors of the Federal Reserve System and the Federal 

Open Market Committee. 

IN THE HOUSE OF REPRESENTATIVES 

JUNE 19, 2003

Mr. SAXTON introduced the following bill; which was referred to the 

Committee on Financial Services 

A BILL

To mandate price stability as the primary goal of the monetary policy of the Board of Governors of the Federal 

Reserve System and the Federal Open Market Committee.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Price Stability Act of 

5 2003’’. 

6 SEC. 2. CONGRESSIONAL FINDINGS. 

7 The Congress hereby finds the following: 
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1 (1) Price stability provides the essential founda2 tion for sustainable long-run economic and employ3 ment growth. 

4 (2) Price stability enables the price system (the 

5 information or signaling mechanism of market 

6 economies) to function most effectively by directing 

7 resources to their most beneficial use. 

8 (3) Price stability provides a reliable anchor for 

9 the price system so that comparative values can be 

10 established and accurately measured. 

11 (4) Price stability works to lower interest rates 

12 and stabilize financial markets. 

13 (5) Price stability serves to promote trans14 parency, accountability, and credibility in monetary 

15 policy. 

16 (6) A more open and transparent formulation 

17 of monetary policy by the Board of Governors of the 

18 Federal Reserve System is, in turn, an essential in19 gredient for pursuing and maintaining price sta20 bility. 

21 SEC. 3. PRICE STABILITY AS OVERRIDING GOAL OF MONE22 TARY POLICY. 

23 (a) DECLARATION OF POLICY.—

24 (1) IN GENERAL.—Notwithstanding any other 

25 provision of law, the primary and overriding goal of 
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1 the Board of Governors of the Federal Reserve Sys2 tem (hereafter in this section referred to as the 

3 ‘‘Board’’) and the Federal Open Market Committee 

4 (hereafter in this section referred to as the ‘‘Com5 mittee’’) with regard to monetary policy shall be the 

6 achievement of price stability. 

7 (2) PREEMINENCE OVER OTHER GOALS.—Para8 graph (1) shall not be construed as altering or af9 fecting any other goal of monetary policy established 

10 under Federal law or by the Board except to the ex11 tent any such goal conflicts with, or is otherwise in12 consistent with, the goal of achieving price stability. 

13 (3) TEMPORARY SUSPENSION IN EVENT OF WAR

14 OR ECONOMIC EMERGENCY.—The Board and the 

15 Committee may suspend the applicability of para16 graph (1) for a period not to exceed 90 days if the 

17 Committee, by a majority vote, and the President 

18 jointly determine that such suspension is necessary 

19 and appropriate and in the public interest due to 

20 war or an economic emergency. 

21 (b) DEFINITION OF PRICE STABILITY GOAL RE22 QUIRED.—

23 (1) IN GENERAL.—The Board and the Com24 mittee shall establish a definition of the goal of price 

25 stability. 
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1 (2) CRITERIA.—The Board and the Committee 

2 shall implement the definition of price stability es3 tablished pursuant to paragraph (1) through infla4 tion targets. 

5 (c) TIMEFRAME.—The Board and the Committee 

6 shall specify an appropriate timeframe for achieving price 

7 stability. 

8 (d) FALL-BACK OPTIONS.—The Board shall deter9 mine in advance what action the Board will take if the 

10 goal of fully achieving price stability is not met within the 

11 timeframe established by the Board and the Committee 

12 under subsection (c).

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