ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The Federal Reserve seeks to control inflation by influencing interest rates. When inflation is too high, the Federal Reserve typically raises interest rates to slow the economy and bring inflation down.

Detailed explanation-2: -The Fed envisions bringing inflation down to about 2%-its preferred pace of price rises across the economy-from its current rate of 8.2%. The challenge is that the Fed doesn’t have many levers to pull to achieve that goal.

Detailed explanation-3: -The Federal Reserve continues to pursue efforts to stem the tide of higher inflation by slowing the economy. Since March 2022, the Fed has raised interest rates substantially while gradually reducing its asset holdings. The economy continues to maintain positive growth despite the Fed’s measures.

Detailed explanation-4: -The Federal Reserve conducts the nation’s monetary policy by managing the level of short-term interest rates and influencing the availability and cost of credit in the economy. Monetary policy directly affects interest rates; it indirectly affects stock prices, wealth, and currency exchange rates.