The Federal Reserve

The Federal Reserve — "the Fed" — is the central bank of the United States and, by extension, the most influential monetary authority in the world. Because the dollar anchors the global system, a Fed decision is a global event.

Mandate and structure

The Fed has a dual mandate: maximum employment and stable prices (a 2% inflation target). Policy is set by the FOMC (Federal Open Market Committee), which meets eight times a year. It controls the federal funds rate.

How the Fed moves markets

• Rate decisions set the cost of dollars worldwide.
• The "dot plot" — a chart of where each official expects rates to go — is scrutinized for the future path.
• The press conference with the Chair often moves markets more than the decision itself, because it shapes expectations.

QE and QT — the balance-sheet tools

When rates are already near zero, the Fed turns to quantitative easing (QE): creating money to buy bonds, pushing yields down and flooding the system with liquidity. This tends to lift risk assets and weaken the dollar. The reverse, quantitative tightening (QT), drains that liquidity and is generally a headwind for risk assets.

What it means for your trades

• Hawkish Fed (higher rates / less stimulus) → stronger dollar, pressure on gold and on rate-sensitive stocks, headwind for emerging-market currencies like the real.
• Dovish Fed (lower rates / more stimulus) → weaker dollar, support for gold, equities and emerging markets.

Every macro read on this platform starts with one question: where is the Fed leaning? The DXY and the yield-curve lessons ahead show you how to see that lean in live prices.