The Federal Reserve is the central bank of the United States, responsible for setting interest-rate policy and overseeing the banking system.
The Fed has a 'dual mandate' from Congress: maximum employment and stable prices. It is made up of a Board of Governors in Washington and 12 regional Federal Reserve Banks. Its main tool is the fed funds rate, but it can also buy or sell bonds (quantitative easing or tightening).
Why it matters to you
Fed decisions affect what you pay to borrow and what you earn on savings, and they move stock and bond markets.