The Federal Reserve, often referred to as the Fed, is the central banking system of the United States. Established in 1913, its primary purpose is to provide the country with a safe and flexible monetary and financial system. The Federal Reserve conducts monetary policy by influencing money supply and interest rates to achieve maximum employment, stable prices, and moderate long-term interest rates.
It comprises twelve regional Federal Reserve Banks and is governed by a Board of Governors, which is appointed by the President of the United States. The Fed plays a crucial role in regulating and supervising banks, maintaining financial stability, providing financial services, and serving as a lender of last resort.
Through tools such as open market operations, the discount rate, and reserve requirements, the Federal Reserve aims to manage the economy by promoting sustainable economic growth while controlling inflation. It also acts as a bank for the U.S. government and holds the country’s gold and foreign currency reserves.
**Impact of Federal Reserve's Decisions** The Federal Reserve announced its third interest rate cut of 2024, aiming to reduce borrowing expenses nationwide. However, this decision sparked a significant downturn in…