ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The Federal Reserve Act of 1913 gave the Federal Reserve responsibility for setting monetary policy. The Federal Reserve controls the three tools of monetary policy–open market operations, the discount rate, and reserve requirements.

Detailed explanation-2: -The Federal Open Market Committee sets U.S. monetary policy in accordance with its mandate from Congress: to promote maximum employment, stable prices, and moderate long-term interest rates in the U.S. economy.

Detailed explanation-3: -The Federal Open Market Committee (FOMC or Committee) is responsible for monetary policy decisions to achieve these goals. The goals of maximum employment and price stability, commonly known as the “dual mandate”, create the conditions for moderate long-term interest rates.

Detailed explanation-4: -The Federal Open Market Committee (FOMC) conducts monetary policy by adjusting the target range for the federal funds rate. The Fed implements monetary policy by using its monetary policy tools to ensure that market interest rates are at levels consistent with the FOMC’s target.

Detailed explanation-5: -The Federal Open Market Committee (FOMC) is a committee within the Federal Reserve System (the Fed) that is charged under United States law with overseeing the nation’s open market operations (e.g., the Fed’s buying and selling of United States Treasury securities).