Federal Reserve

The Federal Reserve (the Fed) is the central bank of the United States. It sets the federal funds rate: the interest rate at which banks lend money to each other overnight. This rate ripples through the entire economy, affecting mortgage rates, bond yields, and stock valuations.

When inflation is high, the Fed raises rates to slow spending. When the economy weakens, it cuts rates to stimulate growth. For investors, Fed decisions are among the most important macro events to follow.