Federal Reserve (The Fed) definition

The Federal Reserve, or the Fed, is the central bank of the United States.

Home Investing glossary Federal Reserve (The Fed)

What is the Federal Reserve?

The Federal Reserve, or the Fed, is the central bank of the United States. It’s responsible for helping to maintain economic stability by managing interest rates, controlling inflation, and making sure the financial system runs smoothly.

 

What does the Fed do?

The Fed has a few key jobs:

  • Setting interest rates: it raises the base rate to slow down inflation and lowers it to encourage borrowing and spending.
  • Regulating banks: making sure banks are financially healthy and complying with relevant regulations.
  • Managing the money supply: controlling how much money is circulating in the economy.

When the Fed makes a big decision – like changing interest rates – it can affect everything from stock markets to mortgage rates both in the US and worldwide.

Investing with Moneybox

Learn about how investing with Moneybox works.

Let's go

Investing glossary

abcdefghijklmnopqrstuvwxyz

It's important you know

Capital at risk. All investing should be for the longer term. The value of your investments can go up and down, and you may get back less than you invest. Tax treatment depends on individual circumstances and may be subject to change in the future.

A 25% government penalty applies if you withdraw money from a Lifetime ISA for any reason other than buying your first home (up to £450,000) or for retirement, and you may get back less than you paid into your Lifetime ISA.

Your home may be repossessed if you do not keep up repayments on your mortgage.

Payments you make into your pension won’t be accessible until the minimum pension age (currently 55, increasing to age 57 from 2028). Tax treatment depends on individual circumstances and may be subject to change in the future.

Get started