A renewed focus on the US Federal Reserve’s so-called “third mandate” is raising questions about the future of monetary policy and its impact on the dollar and Bitcoin.
What is the third mandate?
The Federal Reserve is best known for its dual mandate:
Maintaining price stability and maximizing employment.
However, President Donald Trump’s recent Fed governor pick, Stephen Miran, has cited a lesser-known third mandate, which is a statutory requirement from the 1913 Federal Reserve Act.
This third objective directs the Fed to also aim for ‘moderate long-term interest rates’ alongside its other goals.
While this mandate has been largely ignored for decades, it provides legal justification for the central bank to directly intervene in long-term interest rates.
Potential for yield curve control
The Trump administration is now using this third mandate as a basis for more aggressive intervention in bond markets, including possible yield curve control or expanded quantitative easing.
Yield curve control would involve the Fed purchasing government bonds to cap long-term interest rates at targeted levels.
This approach could lower government borrowing costs as US national debt climbs past $37.5 trillion and could also drive down mortgage rates to stimulate the housing market.
Possible effects on bitcoin
Christian Pusateri, founder of Mind Network, described the move as ‘financial repression by another name,’ suggesting it could lead to tighter control over the cost of money. Pusateri noted:
‘Bitcoin stands to absorb massive capital as the preferred hedge against the global financial system.’
Arthur Hayes, former BitMEX CEO, echoed this optimism, predicting that yield curve control could push Bitcoin’s price dramatically higher.
