Federal Reserve
MacroDefinition
The central bank of the United States (everyone calls it 'the Fed'). Congress gave it two jobs: keep prices stable (they target about 2% inflation) and keep unemployment low. To do that, it controls short-term interest rates, manages the money supply, and acts as the lender of last resort when banks run into trouble.
Seven Board members plus five regional Fed presidents form a group called the FOMC, which votes on interest rates eight times a year. The Fed is arguably the single most powerful economic actor in the world.
Seven Board members plus five regional Fed presidents form a group called the FOMC, which votes on interest rates eight times a year. The Fed is arguably the single most powerful economic actor in the world.
Example
When the 2008 financial crisis hit, the Fed slashed interest rates to near zero and bought trillions of dollars of bonds to keep credit flowing. When inflation spiked after COVID, it did the reverse: it raised rates aggressively starting in 2022.