Recent trends in U. S. monetary policy Since the inauguration, in March 1951, of the new flexible monetary policy in the United States, the Federal Reserve System has been struggling with the difficult task of evolving new objectives and policy guides in its task of exercising monetary control. The agreement, in March 1951, between the Treasury and the Federal Reserve System gave the latter more freedom in its policy of supporting the government securities market and allowed more attention to be given to problems of employment, the level of production, and prices. Notably, it then became possible to envisage the use of a restrictive monetary policy to control inflationary tendencies. As a result, the Federal Reserve Open Market Committee has given up its policy of according direct support to the market for long-term government securities both as regards new and outstanding issues and, today, concentrates attention on the short end of the market. However, refraining from dealing in long-term government securities, does not lessen the effectiveness of Federal Reserve policy as regards the loan market, due to the sensitive response of the latter to conditions on the market for short term money. The Federal Reserve System has thus become more independent of the Treasury and, as a result, pays more attention to general economic conditions. The objectives of the System, in this respect, have been sumarized by Federal Reserve officials as being concerned with «achieving and maintaining maximum employment, a maximum sustainable rate of economic growth, and stable price levels». In assessing the results achieved by the Federal Reserve System, it should be born in mind that the system, although independent of the Treasury, is extremely sensitive to the state of opinion in Congress and, as a result, in the country as a whole. Given the reduced tolerence, in the United States, for unemployment and the insistence on rapid economic growth, Federal Reserve officials have not failed to point out that the maintenance of stable prices is rendered more difficult. Rut it is impossible to say in advance what would be the outcome of a serious conflict between these objectives. In the technical sphere, the Federal Reserve System has had to revise the instruments at its comand for implementing a flexible monetary policy. One result of this policy has been a reduced reliance on changes in legal reserve requirements of member banks. On the other hand, open-market operations and discount policy have become more important and are rendered more effective by the increase in member bank borrowing from the System and the maintenance of the tradition against continued indebtedness towards Federal Reserve banks. It may be concluded that, unless economic problems become graver than they have been since 1951, main reliance will continue to be put upon Federal Reserve use of monetary policy. But a severe shump or inflation would render necessary other broader policy measures.