Federal Reserve System (the Fed)

Definition

The Federal Reserve System is the central bank of the United States, responsible for setting monetary policy, supervising and regulating banks, and providing financial services to depository institutions, the U.S. government, and foreign official institutions. It plays a key role in achieving macroeconomic goals such as controlling inflation, maximizing employment, and stabilizing financial markets.

Related terms

Monetary policy:

The process by which a central bank manages the money supply and interest rates to influence economic activity.

Inflation:

A general increase in prices across an economy, diminishing purchasing power over time.

Interest rates: The cost of borrowing money or the return on savings, often set or influenced by a country's central bank to guide economic activity