Understanding monetary policy

What is monetary policy?

A nation’s central bank, which in the United States, is the Federal Reserve, typically controls monetary policy. The Fed’s management of monetary policy can have a significant impact on the shape of the nation’s economy. Congress’ mandate for the Fed is to maintain price stability (manage inflation); promote maximum sustainable employment (low unemployment); and provide for moderate, long-term interest rates. Fed monetary policy influences the cost of many forms of consumer debt such as mortgages, credit cards and automobile loans.

What is the Federal Reserve?

The Fed is the nation’s central bank, and perhaps the most influential financial…