[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 653 Introduced in House (IH)]







106th CONGRESS
  1st Session
                                H. R. 653

 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

                            February 9, 1999

  Mr. Saxton introduced the following bill; which was referred to the 
              Committee on Banking and 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.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Price Stability Act of 1999''.

SEC. 2. CONGRESSIONAL FINDINGS.

    The Congress hereby finds the following:
            (1) Price stability provides the essential foundation for 
        sustainable long-run economic and employment growth.
            (2) Price stability enables the price system (the 
        information or signaling mechanism of market economies) to 
        function most effectively by directing resources to their most 
        beneficial use.
            (3) Price stability provides a reliable anchor for the 
        price system so that comparative values can be established and 
        accurately measured.
            (4) Price stability works to lower interest rates and 
        stabilize financial markets.
            (5) Price stability serves to promote transparency, 
        accountability, and credibility in monetary policy.
            (6) A more open and transparent formulation of monetary 
        policy by the Board of Governors of the Federal Reserve System 
        is, in turn, an essential ingredient for pursuing and 
        maintaining price stability.

SEC. 3. PRICE STABILITY AS OVERRIDING GOAL OF MONETARY POLICY.

    (a) Declaration of Policy.--
            (1) In general.--Notwithstanding any other provision of 
        law, the primary and overriding goal of the Board of Governors 
        of the Federal Reserve System (hereafter in this section 
        referred to as the ``Board'') and the Federal Open Market 
        Committee (hereafter in this section referred to as the 
        ``Committee'') with regard to monetary policy shall be the 
        achievement of price stability.
            (2) Preeminence over other goals.--Paragraph (1) shall not 
        be construed as altering or affecting any other goal of 
        monetary policy established under Federal law or by the Board 
        except to the extent any such goal conflicts with, or is 
        otherwise inconsistent with, the goal of achieving price 
        stability.
            (3) Temporary suspension in event of war or economic 
        emergency.--The Board and the Committee may suspend the 
        applicability of paragraph (1) for a period not to exceed 90 
        days if the Committee, by a unanimous vote, and the President 
        jointly determine that such suspension is necessary and 
        appropriate and in the public interest due to war or an 
        economic emergency.
    (b) Numerical Definition of Price Stability Goal Required.--
            (1) In general.--The Board and the Committee shall 
        establish an explicit numerical definition of the goal of price 
        stability.
            (2) Criteria.--The Board and the Committee shall--
                    (A) use a broad measure or index of general 
                inflation in the form of inflation targets that is 
                readily available and accessible to the public as the 
                basis for the numerical definition under paragraph (1); 
                and
                    (B) disclose any adjustment to any such index or 
                any explicit growth band utilized by the Board and the 
                Committee in connection with any such index.
    (c) Timeframe.--The Board and the Committee shall specify the 
appropriate timeframe for achieving price stability.
    (d) Fall-Back Options.--The Board shall determine in advance what 
action the Board will take if the goal of fully achieving price 
stability is not met within the timeframe established by the Board and 
the Committee under subsection (c).
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