The Federal Reserve

July 30, 2021 • Volume 31, Issue 27
Has it waited too long to curb inflation?
By Patricia Pan Connor

Introduction

The Federal Reserve, America's central bank, plays an important role in protecting and stabilizing the U.S. economy by controlling inflation, limiting unemployment and regulating financial institutions. In response to the business shutdowns resulting from the COVID-19 pandemic, the Fed undertook a host of aggressive actions to stimulate the economy, including reducing its benchmark interest rate to near zero, establishing massive emergency lending programs and buying large amounts of bonds and other assets. But the economy has revived this year and prices are rising as consumers begin spending again and businesses expand. The Fed now faces questions about whether it has waited too long to control inflation by pulling back on its stimulus measures. Critics have also challenged the Fed's recent foray into social justice and environmental questions. And there is an ongoing debate among economic experts and policymakers about the degree to which the Fed should be insulated from pressure by political leaders as it sets its policies.

Photo of the Federal Reserve's headquarters in Washington, D.C., on July 24, 2017. (Getty Images/Smith Collection/Gado)
The Federal Reserve's headquarters is in Washington, D.C. The central bank has a mandate to achieve maximum employment and stable prices and to moderate long-term interest rates. (Getty Images/Smith Collection/Gado)
ISSUE TRACKER for Related Reports
Federal Reserve System
Jul. 30, 2021  The Federal Reserve
Jan. 03, 2014  The Federal Reserve
Jul. 30, 2010  Financial Industry Overhaul
BROWSE RELATED TOPICS:
Budget and the Economy
Congress Actions
Consumer Behavior
Currency
Data and Statistics
Deficit, Federal Debt, and Balanced Budget
Economic Analyses, Forecasts, and Statistics
Financial Institutions
General Employment and Labor
Infectious Diseases
Inflation
Investment and the Stock Market
Party Politics
Party Politics
Powers and History of the Presidency
Regulation and Deregulation
Retirement, Pensions, and Social Security
Unemployment and Employment Programs
Wages
Work and the Family