Today, many policymakers, academics, and commentators claim that the Federal Reserve has a “dual mandate” to pursue stable prices and maximum employment. This interpretation is based on section 2A of the Federal Reserve Act. However, this interpretation completely ignores the first clause of the text: The Federal Reserve “shall maintain long run growth of monetary and credit aggregates commensurate with the economy’s long run potential to increase production.” Read correctly, section 2A states that the Fed has a sole mandate to regulate credit.

This Note argues that a credit-based mandate is consistent with the history of the Federal Reserve. From the 1910s until the late 1970s, the Federal Reserve primarily focused on regulating excessive credit, which could manifest as credit-fueled inflation or credit-fuel financial instability. While the text of section 2A seems obtuse, it mirrors language used by the Federal Reserve as early as 1923, which framed its role as tackling lending for speculative purposes. Even as the Federal Reserve’s toolkit and theory for how the economy operated changed, the Federal Reserve was relatively consistent about this understanding. During this period, it also repeatedly disclaimed responsibility for regulating overall price levels.

Given this understanding, this Note reconsiders former Chairman Paul Volcker’s decision to address broader inflation in the late twentieth century with aggressive interest rate hikes from 1979 to 1982. If the Federal Reserve’s mandate is to regulate credit, then his actions were plausibly ultra vires—at least under a less deferential standard of review, as applied to agencies today. This reconsideration raises important questions about agency statutory interpretation more broadly.

Benjamin Dinovelli, Note, The Federal Reserve’s Forgotten Credit Mandate, 138 Harv. L. Rev. 1887 (2025), available here.