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The Fed has maintained interest rates low over the last decade while deploying billions of dollars in stimulus and expanding its regulatory control.
- The Federal Reserve is America's most powerful economic organization. It is in charge of monetary policy and financial system regulation.
- It accomplishes this through controlling interest rates, affecting the quantity of money in the economy, and, in recent years, purchasing trillions of dollars in assets to support financial markets.
- The COVID-19 epidemic and the fallout from Russia's invasion of Ukraine have caused worrying inflation, prompting the Fed to boost interest rates dramatically in 2022.
How has the Fed’s regulatory role evolved:
Throughout the 1990s, the Fed's regulatory authority grew steadily. After a 1999 law permitted the merging of securities, insurance, and banking organizations, and enabled banks to mix retail and investment activities, the banking business in the United States transformed substantially. The Glass-Steagall Act of 1933 had previously divided these two roles. The revisions also made the Fed responsible for guaranteeing the stability of banks by implementing regulations such as minimum capital requirements, consumer protections, antitrust laws, and anti-money laundering policies.
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