SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Price Stability Act of 
2008’’. 
SEC. 2. FINDINGS; STATEMENT OF POLICY. 
(a) FINDINGS.—The Congress finds the following: 
(1) Price stability is a prerequisite for sustain-
able long-term economic growth, job creation, and 
moderate interest rates. 
(2) Inflation erodes the value of Americans’ in-
come and savings. 
(3) Inflation distorts the pricing system and the 
efficient allocation of resources in the economy. 
(4) Inflation makes long-term planning difficult 
and raises the effective tax rate on capital, thereby 
impeding investment. 
(5) Through its determination of monetary pol-
icy, the Board of Governors of the Federal Reserve 
System is ultimately responsible for controlling the 
long-run rate of inflation in the economy. 
(6) The multiple policy goals of the Full Em-
ployment and Balanced Growth Act of 1978 cause 
confusion and ambiguity about the appropriate role 
and aims of monetary policy, which can add to vola-
tility in economic activity and financial markets. 
(7) There is a need for the Congress to clarify 
the proper role of the Board of Governors of the 
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Federal Reserve System in economic policymaking, 
in order to achieve the best environment for long- 
term economic growth and job creation. 
(8) An explicit price stability goal would pro-
mote transparency, accountability and credibility in 
monetary policy. 
(9) Price stability should be the primary long- 
term goal of the Board of Governors of the Federal 
Reserve. 
(b) STATEMENT OF POLICY.—It is the policy of the 
United States that— 
(1) the principal economic responsibilities of the 
Government are to establish and ensure an environ-
ment that is conducive to both long-term economic 
growth and increases in living standards, by estab-
lishing and maintaining free markets, low taxes, re-
spect for private property, and the stable, long-term 
purchasing power of the United States currency; and 
(2) the primary long-term goal of the Board of 
Governors of the Federal Reserve System should be 
to promote price stability. 
SEC. 3. MONETARY POLICY. 
(a) AMENDMENT TO THE FEDERAL RESERVE ACT.— 
Section 2A of the Federal Reserve Act (12 U.S.C. 225a) 
is amended to read as follows: 
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‘‘SEC. 2A. MONETARY POLICY. 
‘‘(a) PRICE STABILITY.—The Board and the Federal 
Open Market Committee (hereafter in this section referred 
to as the ‘Committee’) shall— 
‘‘(1) establish an explicit numerical definition of 
the term ‘price stability’; and 
‘‘(2) maintain a monetary policy that effectively 
promotes long-term price stability. 
‘‘(b) MARKET STABILITY
AND LIQUIDITY.—Sub-
section (a) shall not be construed as a limitation on the 
authority or responsibility of the Board— 
‘‘(1) to provide liquidity to markets in the event 
of a disruption that threatens the smooth func-
tioning and stability of the financial sector; or 
‘‘(2) to serve as a lender of last resort under 
this Act when the Board determines such action is 
necessary. 
‘‘(c) CONGRESSIONAL CONSULTATION.—Not later 
than February 20 and July 20 of each year, the Board 
shall consult with the Congress at semiannual hearings be-
fore the Committee on Banking, Housing, and Urban Af-
fairs of the Senate and the Committee on Financial Serv-
ices of the House of Representatives, about the objectives 
and plans of the Board and the Committee with respect 
to achieving and maintaining price stability. 
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‘‘(d) CONGRESSIONAL
OVERSIGHT.—The Board 
shall, concurrent with each semiannual hearing required 
by subsection (c), submit a written report to the Congress 
containing— 
‘‘(1) numerical measures to help assess the ex-
tent to which the Board and the Committee are 
achieving and maintaining price stability in accord-
ance with subsection (a); 
‘‘(2) a description of the intermediate variables 
used by the Board to gauge the prospects for achiev-
ing the objective of price stability; and 
‘‘(3) the definition, or any modifications there-
to, of the term ‘price stability’ established in accord-
ance with subsection (a)(1).’’. 
(b) COMPLIANCE ESTIMATE.—Concurrent with the 
first semiannual hearing required by section 2A(b) of the 
Federal Reserve Act (as amended by subsection (a) of this 
section) following the date of enactment of this Act, the 
Board of Governors of the Federal Reserve System shall 
submit to the Congress a written estimate of the length 
of time it will take for the Board and the Federal Open 
Market Committee to fully achieve price stability. The 
Board and the Committee shall take into account any po-
tential short-term effects on employment and output in 
complying with the goal of price stability. 
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SEC. 4. REPEAL OF OBSOLETE PROVISIONS. 
(a) FULL EMPLOYMENT AND BALANCED GROWTH 
ACT
OF 1978.—The Full Employment and Balanced 
Growth Act of 1978 (15 U.S.C. 3101 et seq.) is hereby 
repealed. 
(b) EMPLOYMENT ACT OF 1946.—The Employment 
Act of 1946 (15 U.S.C. 1021 et seq.) is amended— 
(1) in section 3 (15 U.S.C. 1022)— 
(A) in the section heading, by striking 
‘‘AND SHORT-TERM ECONOMIC GOALS AND 
POLICIES’’; 
(B) by striking ‘‘(a)’’; and 
(C) by striking ‘‘in accord with section 
11(c) of this Act’’ and all that follows through 
the end of the section and inserting ‘‘in accord-
ance with section 5(c).’’; 
(2) in section 9(b) (15 U.S.C. 1022f(b)), by 
striking ‘‘, the Full Employment and Balanced 
Growth Act of 1978,’’; 
(3) in section 10 (15 U.S.C. 1023)— 
(A) in subsection (a), by striking ‘‘in the 
light of the policy declared in section 2’’; 
(B) in subsection (e)(1), by striking ‘‘sec-
tion 9’’ and inserting ‘‘section 3’’; and 
(C) in the matter immediately following 
paragraph (2) of subsection (e), by striking 
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‘‘and the Full Employment and Balanced 
Growth Act of 1978’’; 
(4) by striking section 2; 
(5) by striking sections 4, 5, 6, 7, and 8; and 
(6) by redesignating sections 3, 9, 10, and 11 
as sections 2, 3, 4, and 5, respectively. 
(c) CONGRESSIONAL BUDGET ACT OF 1974.—Title 
III of the Congressional Budget Act of 1974 (2 U.S.C. 
631 et seq.) is amended— 
(1) in section 301— 
(A) in subsection (b), by striking para-
graph (1) and redesignating paragraphs (2) 
through (9) as paragraphs (1) through (8), re-
spectively; 
(B) in subsection (d), in the second sen-
tence, by striking ‘‘the fiscal policy’’ and all 
that follows through the end of the sentence 
and inserting ‘‘fiscal policy.’’; 
(C) in subsection (e)(1), in the second sen-
tence, by striking ‘‘as to short-term and me-
dium-term goals’’; and 
(D) by striking subsection (f) and inserting 
the following: 
‘‘(f) Repealed’’; and 
(2) in section 305— 
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(A) in subsection (a)(3), by inserting be-
fore the period at the end ‘‘, as described in 
section 2 of the Price Stability Act of 2008’’; 
(B) in subsection (a)(4)— 
(i) by striking ‘‘House sets forth the 
economic goals’’ and all that follows 
through ‘‘designed to achieve,’’ and insert-
ing ‘‘House of Representatives sets forth 
the economic goals and policies, as de-
scribed in section 2 of the Price Stability 
Act of 2008,’’; and 
(ii) by striking ‘‘such goals,’’ and all 
that follows through the end of the para-
graph and inserting ‘‘such goals and poli-
cies.’’; 
(C) in subsection (b)(3), by inserting be-
fore the period at the end ‘‘, as described in 
section 2 of the Price Stability Act of 2008’’; 
and 
(D) in subsection (b)(4)— 
(i) by striking ‘‘goals (as’’ and all that 
follows through ‘‘designed to achieve,’’ and 
inserting ‘‘goals and policies, as described 
in section 2 of the Price Stability Act of 
2008,’’; and 
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(ii) by striking ‘‘such goals,’’ and all 
that follows through the end of the para-
graph and inserting ‘‘such goals and poli-
cies.’’. 
Æ 
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