The Fed's job is to promote a healthy economy and stable prices. The Fed pursues these goals by influencing the cost and availability of money and credit in the economy, which is called monetary policy. Fed policy-makers meet eight times per year to make decisions about how to use monetary policy to meet economic goals.
The Fed cannot directly control inflation or keep employment high. Instead, the Fed works indirectly by raising and lowering a specific interest rate called the federal funds rate. Changes in the federal funds rate ripple through the financial markets by triggering changes in other short-term interest rates. These ripple effects are intended to influence the amount of money and credit in the economy and ultimately impact jobs, prices, and output. The Fed may also act to influence long-term interest rates more directly, through large-scale purchases of long-term Treasuries or other securities.