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Although all of the Fed’s roles are vital to maintaining a stable, growing economy, monetary policy is the most visible to many citizens. Monetary policy refers to the actions taken by the Federal Reserve to influence the supply of money and credit to meet the goals set by Congress. The Federal Reserve Act states that the Fed should conduct monetary policy to “promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates.”
The Fed’s monetary policymaking body is the Federal Open Market Committee, or FOMC. This group comprises the seven Fed Governors, the president of the Federal Reserve Bank of New York, and four of the remaining 11 Reserve Bank presidents, who serve one-year terms on a rotating basis. All 12 Reserve Bank presidents attend the FOMC meetings, participate in the discussions, and contribute to the Committee’s assessment of the economy and policy options.