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Special Reports


Learn more about how the Federal Reserve and the Treasury Department reached an accord that permitted the Fed to pursue an independent monetary policy more than 50 years ago.

The Federal Reserve's response to the financial market crisis raised new questions about the line between the Treasury's fiscal policy objectives and the Fed's monetary and credit policies. Similar questions arose more than a half a century ago, when the Federal Reserve committed to maintaining a low interest rate peg on U.S. government bonds to help finance World War II.

On March 4, 1951, the Federal Reserve and the Treasury released a joint announcement of an understanding that has come to be known as the Treasury-Federal Reserve Accord. This watershed agreement released the Federal Reserve from its obligation and made possible the independent conduct of monetary policy. The dramatic events of 1951 laid the institutional foundation for the Fed's pursuit of low inflation and economic stabilization.

This web-exclusive supplement to the Winter 2001 special issue of Economic Quarterly includes background information on the Treasury-Fed Accord, as well as biographies of significant people involved with the historic agreement, related economic data, and references for further research.

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