The Evolution of Monetary Policy and the Federal Reserve System over the past Thirty Years: an Overview

Over the past thirty years, the activities of the Federal Reserve System have undergone major change. Public interest and confidence in monetary policy have grown immensely. Low inflation has emerged, if not as the primary objective of monetary policy, at least as a more central focus than it was thirty years ago. The Federal Reserve System has also undergone changes. Reserve Banks now charge for many of their financial services, rather than providing them free to banks that are System members. Placed in competition with commercial banks in providing financial services, Reserve Banks have striven to be more efficient, more responsive, and more innovative. At the same time, Reserve Banks have played increasingly active and increasingly visible roles in their communities and their Districts, providing economic expertise and civic leadership. Frank E. Morris, President of the Federal Reserve Bank of Boston from 1968 to 1988, was a key contributor to all these developments. The year after he took office, the Boston Fed sponsored a conference on “Controlling Monetary Aggregates,” at which the role of the monetary aggregates in the conduct of monetary policy was vigorously debated. This was the first of a series of conferences on important public policy issues that continues to this day. Frank was also a champion of regional research and of the Reserve Banks using their expertise to contribute to the economic well-being of their Districts. In the mid 1970s, Frank and the Boston Bank played a leadership role in helping the Commonwealth of Massachusetts resolve a critical financial crisis, by providing credible analysis of the state’s