What does the Federal Reserve actually do?

The Fed sets the short-term interest rate that anchors borrowing costs across the economy, manages the size of its balance sheet, supervises banks, and acts as lender of last resort. Its legal mandate is stable prices and maximum employment. Eight times a year the Federal Open Market Committee meets to set policy.

How do rate decisions move markets?

Higher rates raise the return on cash and bonds, which pulls money out of riskier assets and raises the discount rate applied to future profits, pressuring stock and crypto valuations. Lower rates do the reverse. Markets move on expectations more than decisions, so the Fed’s guidance about future policy often matters more than the vote itself.

Which data does the Fed watch?

Inflation, especially the PCE index and CPI; the labor market, through payrolls, unemployment, and wage growth; GDP and consumer spending; and financial conditions. Surprises in any of these reprice the expected rate path within minutes.

Topic · Gokhshtein Media

Federal Reserve

Rates, inflation, and the FOMC — the central bank that prices every asset

30 stories · Updated 7h ago

Every asset on this site — stocks, Bitcoin, bonds, housing — is priced off decisions made in one building in Washington. This hub gathers the Macro & Rates desk’s Federal Reserve coverage: FOMC meetings, the rate path, inflation prints, and the constant tug-of-war between the Fed, the markets, and the White House. If you want to know why everything moved today, the answer usually starts here.

Coverage led by The Macro & Rates Desk

The basics · reviewed September 25, 2026

What does the Federal Reserve actually do?: The Fed sets the short-term interest rate that anchors borrowing costs across the economy, manages the size of its balance sheet, supervises banks, and acts as lender of last resort. Its legal mandate is stable prices and maximum employment. Eight times a year the Federal Open Market Committee meets to set policy.
How do rate decisions move markets?: Higher rates raise the return on cash and bonds, which pulls money out of riskier assets and raises the discount rate applied to future profits, pressuring stock and crypto valuations. Lower rates do the reverse. Markets move on expectations more than decisions, so the Fed’s guidance about future policy often matters more than the vote itself.
Which data does the Fed watch?: Inflation, especially the PCE index and CPI; the labor market, through payrolls, unemployment, and wage growth; GDP and consumer spending; and financial conditions. Surprises in any of these reprice the expected rate path within minutes.

Terms to know

2-year Treasury yield 10-year Treasury yield Bank of England Bank of Japan Bank reserves Bank run Bank stress test Basis point Beige Book Bond market Breakeven inflation rate Budget deficit Carry trade Central bank Full glossary →

Research & Analysis

Euro Slides to 17-Month Low as Energy Crisis Overrides Inflation Show

The single currency fell to $1.116 this week as markets bet the ECB will raise rates less than inflation data suggests, while France's borrowing costs diverge sharply from Germany's.

By The Research Desk3 min read7h ago