What is the role of the Federal Reserve in the U.S. economy?

The Federal Reserve, often referred to as the Fed, is the central bank of the United States and plays a crucial role in managing the country’s monetary policy, financial stability, and economic growth. It sets interest rates to influence borrowing and spending, controls the money supply, and works to maintain price stability and low unemployment. The Fed also regulates and supervises financial institutions to ensure the stability of the banking system and prevent systemic risks. During economic downturns, the Federal Reserve may take actions such as lowering interest rates or implementing quantitative easing to stimulate economic activity.