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How Does the Fed Use Its Monetary Policy Tools to Influence the Economy?

Abstract: The Federal Reserve has a congressional mandate to promote maximum employment and price stability. The May issue of Page One Economics explains how the Federal Open Market Committee (FOMC) conducts monetary policy by setting the target range for the federal funds rate and how the Fed uses its policy tools to steer the federal funds rate into the FOMC’s target range.

Keywords: monetary policy; Federal Open Market Committee (FOMC); federal funds rates; interest on reserve balances; overnight reverse repurchase agreement facility; discount window; open market operations;

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Bibliographic Information

Provider: Federal Reserve Bank of St. Louis

Part of Series: Page One Economics Newsletter

Publication Date: 2022-05

Pages: 8 pages