Fed and Its Tools

Fed and Its Tools

Introduction

The Federal Reserve through its monetary policy has a huge impact on global financial markets. By the Fed's actions attracted the attention not only to U.S. investors, but also all over the world. Monetary policy is a set of tools through which the central bank influences the supply and demand for money, and hence their price (credit) in order to ensure optimal conditions for the prosperity of the economy (Woodward, 2000). The Fed uses three tools to influence an economy to keep the country out of a recession. This paper will cover the three tools ...