Federal Reserve

Federal Reserve – US Central Bank

Monetary Policy

Monetary policy in the United States comprises the Federal Reserve’s actions and communications to promote maximum employment, stable prices, and moderate long-term interest rates–the three economic goals the Congress has instructed the Federal Reserve to pursue.

The Federal Reserve conducts the nation’s monetary policy by managing the level of short-term interest rates and influencing the overall availability and cost of credit in the economy. Monetary policy directly affects short-term interest rates; it indirectly affects longer-term interest rates, currency exchange rates, and prices of equities and other assets and thus wealth. Through these channels, monetary policy influences household spending, business investment, production, employment, and inflation in the United States.

Mandate

The Fed focuses on the following, so it is important to watch related macroeconomic data releases that include them:

  1. Maximum Employment
  2. Stable Prices (Inflation) – Target: 2.00% – Actual: 2.3%
  3. Moderate long term interest rates – Actual: 1.75%

More about the Federal Reserve

CHAIR:
Jerome Powell (Chairman)
BOARD MEMBERS:
R Clarida (Vice Chairman)
L Brainard
R Quarles

Learn more about the FEDERAL RESERVE & how they determine Monetary Policy

Purpose & Functions

Monetary Policy

Structure of the Federal Reserve System