A bill under review in the U.S. House Financial Services Committee could reshape the Federal Reserve’s policy framework. The Price Stability Act, H.R. 5396, would amend the Federal Reserve Act by removing the long-standing dual mandate of maximum employment and stable prices, leaving price stability as the central bank’s sole objective. If enacted, the Fed’s room to cut rates could become much tighter.
H.R. 5396 targets the Fed’s dual mandate
The proposal drew attention after a May 14 Wall Street Journal report by Nick Timiraos, a reporter closely watched by markets for Fed coverage. The bill would revise Section 2A of the Federal Reserve Act and strike the language tied to maximum employment, preserving only the inflation goal. The report raised a pointed question: if this law had already been in force in 2025, would the Fed still have delivered its rate cuts.
According to the source material, the Fed began its easing cycle in September 2025 even though core inflation was still running above its 2% target, while the labor market had started to cool. Under a single-mandate structure, weakness in employment would likely carry less weight in policy decisions, and restraining inflation would move to the front of the queue.
New York Fed purchase schedule shows QT has ended
The policy debate is unfolding as open market operations are already shifting direction. In its May 14 operating schedule, the New York Fed said the Fed would conduct about $10 billion in reserve management purchases during the monthly period ending June 11, alongside roughly $16.3 billion in reinvestment purchases.
That schedule signals the Fed had fully ended quantitative tightening at the end of 2025, closing a three-year runoff program. During the balance-sheet reduction cycle that started in 2022, the Fed had allowed as much as $95 billion per month in Treasuries and mortgage-backed securities to roll off. The current setup points the other way, with purchases focused on short-dated Treasury bills maturing within one year and reserves flowing back into the financial system.
The change from runoff to purchases is clear. Still, the source notes that these reserve management purchases are aimed at liquidity control rather than a broader change in the inflation objective. Their function is preventive: add reserves to the banking system and ease short-term funding pressure before strains build up.
SHED data shows rising anxiety over prices and jobs
The Fed’s annual Survey of Household Economics and Decisionmaking, released the same day, adds social and economic context to the policy picture. The survey was conducted in October 2025 and showed that concern over both prices and employment was climbing at the same time.
About nine in ten respondents said they were worried about rising prices, with affordability becoming a central source of stress for households. On the labor side, as job growth in 2025 approached a standstill, 42% of adults said finding or keeping a job caused at least some concern, up from 37% in 2024. Inflation had cooled from its peak by the second half of 2025, but the accumulated hit to purchasing power was still being felt, especially among lower- and middle-income households.
Legislation remains pending as markets watch the Fed reaction function
The Price Stability Act is still at the committee stage. Supporters argue that a single mandate could make monetary policy more predictable, while critics say removing the employment goal would leave vulnerable workers with less policy support during economic slowdowns.
If the bill becomes law, it would mark the biggest change to the Fed’s framework since the 1977 amendments that formalized the dual mandate. In that setting, even a softer labor market might not be enough to trigger rate cuts if inflation remains above target. Whether the measure can clear the Senate is still uncertain, but the proposal has already pushed markets to reassess how the Fed might react under a price-stability-only regime.