Humphrey and Hawkins sponsored the Full Employment and Balanced Growth Act of 1978. This Congressional Act directed the Fed "to promote effectively the goals of maximum employment, stable prices, and moderate long term interest rates."

In passing this Act, Congress declared that it would monitor the actions of the Federal Reserve Board. As a result, the Federal Reserve chairman was commissioned to testify before Congress each February and July (usually in the third week of these months). At his testimony before the House and Senate Banking Committees, the chairman would sum up the views of the FOMC on current economic conditions and set target ranges for various economic variables that depicted growth and inflation.

With or without the Humphrey-Hawkins legislation, nominal and real (inflation-adjusted) GDP growth, the civilian unemployment rate and the PCE chain-price deflator are predicted for the coming year in February. Revisions may be announced in July. Targets for the monetary aggregates also are determined at this time. (Incidentally, the first FOMC meeting of the year, as well as a meeting in mid-year are two days long instead of one because the Fed governors and bank presidents must prepare the Humphrey-Hawkins report and testimony.)

The Humphrey-Hawkins testimony was important during Paul Volcker's reign as Fed chairman, but in the early 1980s, the targets for the monetary aggregates were followed more closely than economic indicators. Since Greenspan came to the pulpit in 1987, market players read every nuance of the testimony lest the chairman give clues as to his thinking about future Fed policy.

The official Humphrey-Hawkins Act actually expired in the late 1990s. Under current provisions of the law, the Federal Reserve chairman is not required to continue to testify before the Senate and Housing Banking Committees. Nevertheless, the Federal Reserve System is an act of Congress, so it wouldn't behoove the Fed to be uncooperative. Since the late 1990s, Fed chairman Alan Greenspan has testified even more frequently before House and Senate committees than he did during the years in which the Humphrey-Hawkins legislation was in place.