cy, according to the Federal Reserve Act, states that they are to "promote maximum employment, stable prices, and moderate long-term interest rates.
             According to David Gilmore, a partner at Foreign Exchange Analytics, Essex, Conn "Any European Central Bank tightening will be swamped by much more from the Fed." Europe has double-digit unemployment and no inflation problem. An aspect of the problem is that the low euro will prompt new imports to the U.S. The current account, as a result of that, decreases. This may alleviate the problem and slightly raise the value of the euro. Although there are some negatives with monetary policy, it can determine the economy's average rate of inflation in the long run. That is important for the economy because high inflation can hinder economic growth in a couple of ways. It adds an inflation risk premium to long-term interest rates, and it complicates the planning and contracting by business and labor that is so essential to capital formation. High inflation also hinders economic growth in other ways. For example, because the tax system isn't indexed to inflation, high inflation helps and hurts different sectors of the economy. Also, it makes people spend their time hedging against inflation instead of pursuing more productive activities. Because the Fed can determine the economy's average rate of inflation, some commentators and some members of Congress have emphasized the need to define the goals of monetary policy regarding price stability, which is achievable. But the Fed, like most central banks, cares about both inflation and measures of the short-run performance of the economy. However, pursuing multiple goals can create conflicts for policy.
             One kind of conflict involves deciding which goal should take precedence at any point in time. Another kind of conflict is the potential for pressure from the political arena. The Fed is somewhat insulated from the pressure of politics by its indep...