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.
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)
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