Federal Reserve News & Analysis Today

The Federal Reserve, often called the Fed, is the central bank of the United States. It was created in 1913, after President Woodrow Wilson signed the Federal Reserve Act in response to a severe financial panic a few years earlier. The system is unusual because it combines a central governing board in Washington with twelve regional Reserve Banks located across the country, plus the Federal Open Market Committee, which makes the key decisions on interest rates and monetary policy. While member banks are required to hold shares in their regional Reserve Banks, these shares do not work like normal corporate stock, since profits are transferred to the U.S. Treasury rather than distributed to shareholders. The Fed’s job covers several major areas: it manages inflation and employment through monetary policy, keeps the banking and financial system stable, supervises banks, operates the backbone of the payments system, and protects consumers in financial markets. Its decisions on interest rates affect borrowing costs for businesses and households, influence investment flows, and often set the tone for financial markets not just in the United States but around the world.