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Federal Reserve System (FED)

Updated on March 11, 2023

FED or Federal Reserve System or Federal Reserve refers to the central bank of the United States. It is a prominent and powerful financial institution in the world and its actions influence the world markets. Like other central banks, its primary aim is to provide the country with a safe and stable monetary and financial system. The Fed board has seven members. It also monitors and operates 12 Federal Reserve banks with their own presidents representing a separate district. The FED’s policy making body, the Federal Open Market Committee, or FOMC meets eight times a year to decide on the rates and this interest rate is the basis for all other interest rates, foreign exchange rates, long-term interest rates etc. This also has a direct impact on FDIs, FIIs and flows into world markets as well as Indian markets because US currency, economy and its direction has a major impact on world economies and markets.