Federal Reserve Bank

Search Dictionary

Definition of 'Federal Reserve Bank'

The Federal Reserve Bank is the central bank of the United States. It was created in 1913 by the Federal Reserve Act, which was signed into law by President Woodrow Wilson. The Fed's primary responsibilities are to maintain the stability of the financial system, regulate the money supply, and promote full employment.

The Fed is led by a seven-member Board of Governors, who are appointed by the President and confirmed by the Senate. The Board of Governors is responsible for setting monetary policy, which is the use of interest rates and other tools to influence the economy. The Fed also supervises and regulates banks and other financial institutions.

The Fed has a number of tools that it can use to influence the economy. One of the most important tools is the federal funds rate, which is the interest rate that banks charge each other for overnight loans. The Fed can raise or lower the federal funds rate in order to influence the amount of money that banks lend to businesses and consumers. The Fed can also buy or sell government bonds, which can also affect interest rates and the money supply.

The Fed's actions can have a significant impact on the economy. By raising or lowering interest rates, the Fed can make it more or less expensive for businesses and consumers to borrow money. This can affect investment and spending, which can in turn affect economic growth. The Fed can also use its regulatory powers to influence the behavior of banks and other financial institutions. This can help to reduce the risk of financial crises and promote financial stability.

The Fed plays a vital role in the U.S. economy. By using its tools and powers, the Fed can help to keep the economy stable and promote economic growth.

Do you have a trading or investing definition for our dictionary? Click the Create Definition link to add your own definition. You will earn 150 bonus reputation points for each definition that is accepted.

Is this definition wrong? Let us know by posting to the forum and we will correct it.