What is the primary responsibility of the Federal Reserve Bank in the United States?

The primary responsibility of the Federal Reserve Bank, often referred to as the Fed, is managing monetary policy. This involves controlling the supply of money and interest rates to achieve macroeconomic goals such as stable prices, maximum employment, and moderate long-term interest rates. The Fed uses various tools, including open market operations, the discount rate, and reserve requirements, to influence the economy. Its decisions have a significant impact on inflation and the overall economic stability of the country.

Effective monetary policy is crucial for economic growth and stability, and the Federal Reserve plays a key role in navigating the economy through various conditions such as recession or inflationary pressures. This function is distinct from other economic tools like setting tax rates or controlling fiscal policy, which are responsibilities of government entities rather than the independent central bank.