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The central banking system of the United States, responsible for monetary policy, bank supervision, and maintaining financial stability.
The Federal Reserve (the "Fed") influences the economy primarily through setting the federal funds rate, the interest rate at which banks lend to each other overnight. When the Fed raises rates, borrowing becomes more expensive, slowing economic activity and inflation. When it lowers rates, borrowing becomes cheaper, stimulating growth. The Fed also conducts open market operations (buying and selling government securities) and quantitative easing (large-scale asset purchases). Fed policy decisions are among the most closely watched events in financial markets, with the potential to move trillions of dollars in asset values.