What is US Federal Reserve (Fed)?
The Federal Reserve is the central bank of the United States. Its 12 Federal Open Market Committee (FOMC) members set the federal funds rate target โ the overnight rate that anchors most other interest rates globally. The Fed has a dual mandate: maximum employment and stable prices (interpreted as 2% inflation). Decisions are announced at 8 FOMC meetings per year, accompanied by economic projections (the "dot plot") quarterly.
Why it matters for investors
Because the US dollar is the world's reserve currency and US Treasury yields anchor global pricing of risk, Fed decisions ripple through every market. A Fed rate cut typically boosts equities, weakens the dollar, supports gold and crypto. A rate hike does the opposite. Forward guidance ("we expect rates to remain elevated through year-end") often moves markets more than the actual decision.