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Executive's Guide to Fed Policy and Associated Risks: Part 1

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Executive's Guide to Fed Policy and Associated Risks: Part 1

Understanding the Role of the Fed and the Tools at Its Disposal

The Conference Board,

5 min read
3 take-aways
Audio & text

What's inside?

How the US Federal Reserve manages its mandates influences how executives manage their businesses. 

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Editorial Rating

8

Qualities

  • Analytical
  • Overview
  • Background

Recommendation

While setting and implementing monetary policy is the US Federal Reserve’s core mission – Congress mandates that it ensure price stability and maximum employment – the central bank also works in several other capacities that can affect businesses of all types. Experts Dana Peterson and Hollis W. Hart explain the Fed’s mandates and governance tools, as well as its priorities and directives, in this robust Part 1 of a two-part series on the US central bank. Business leaders and financial professionals will find this a valuable reference guide.

Summary

The US Federal Reserve uses monetary policy to achieve price stability and maximum employment.

The US Federal Reserve is the world’s most influential central bank. Created in 1913 as an independent entity, the institution’s responsibilities have evolved to include a range of activities, including sustaining the financial system. Undoubtedly, though, the core of the bank’s charge is to navigate the “dual mandate,” which involves creating conditions for maximum employment and steady price levels. Twelve members of the Federal Open Market Committee (FOMC) – seven Fed governors and five regional reserve bank officials – are responsible for designing the monetary agenda that will fulfill those two pillars.

The Fed ...

About the Authors

Dana Peterson is chief economist at the Conference Board. Hollis W. Hart, a former executive at Citi, is a senior fellow at the Conference Board and an advisory board member at ReferencePoint.

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