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The Federal Reserve ‘s Federal Open Market Committee, or FOMC, announced the third rate hike of 2018 this week, a move that was widely expected. But you may be wondering, why did they increase the Federal Reserve’s Fund rate, and what is the purpose of the Federal Reserve, anyway. On this podcast, I’ll interview Dr. Jeff Roach, our Director of Research on the purpose of the Federal Reserve.
The Federal Reserve System, often referred to as the Federal Reserve or simply “the Fed,” is the central bank of the United States. It was created by the Congress to provide the nation with a safer, more flexible, and more stable monetary and financial system. The Federal Reserve was created on December 23, 1913, when President Woodrow Wilson signed the Federal Reserve Act into law.
Since 1977, the Federal Reserve has operated under a mandate from Congress to “promote effectively the goals of maximum employment, stable prices, and moderate long term interest rates” — what is now commonly referred to as the Fed’s “dual mandate.”