The Treasury-Fed Accord of 1951 marked a significant turning point in the evolution of the Federal Reserve's policies and role in the economy. This historic agreement allowed the Fed to phase out its interest-rate peg, granting it the freedom to set interest rates as needed for economic stabilization, including inflation control. Since the 1950s, U.S. monetary policy has been heavily influenced by economists' and policymakers' views about the relationship between inflation and the labor market.

Over time, the Fed's policies have evolved in response to changing economic conditions and the need to maintain financial stability. One key development has been the ongoing change in the behavior of inflation and its relationship to employment. The victory over inflation in the 1980s, led by Paul Volcker, reestablished the primacy of monetary policy for controlling inflation, restored the Fed's credibility, and demonstrated the benefits of Fed policy independence.

Another critical development has been the long-term decline in the neutral rate of interest (R*), which has limited the Fed's ability to support a weak economy through traditional methods of cutting short-term rates. In response, the Fed has adopted new policy tools, such as quantitative easing and more explicit, long-horizon forward guidance, which have proved effective in adding firepower to monetary policy.

The Fed's policy framework and communications have also evolved significantly since the Treasury-Fed Accord. The central bank now provides much more public information about its goals, outlook, and policy plans, including the introduction of an inflation target, a formal statement of policy principles, and the expansion of the Summary of Economic Projections. This increased transparency has helped the Fed better communicate its actions to the public and financial market participants, fostering a more stable and predictable economic environment.