If you follow financial news, you've probably heard many references to "the Fed" along the lines of "the Fed did this or that," or "market watchers are wondering what the Fed will do next." So what exactly is the Fed and what does it do, anyway?
What is the Federal Reserve?
The Federal Reserve--or "the Fed" as it's commonly called--is the central bank of the United States. Generally speaking, a central bank is a large, centrally controlled bank that's in charge of a country's interest rates, money supply, and banking system. Most countries have a central bank.