First, what is the Federal Reserve System? The Federal Reserve System is America’s central bank. The Federal Reserve’ most crucial function is to conduct monetary policy. The reserve consists of four main functions. The first function of the reserve is managing inflation and maintain stable prices. To be able to do this, the Federal Reserve must set a 2.0 percent inflation rate. The Federal Reserve moderate long-term interest rates through open market operations and fed funds rate. The goal of the Federal Reserve is to maintain a 2-3 percent gross domestic product growth rate. The second function is supervising and regulating many of the nations banks to protect consumers. The third function the reserve is in charge of is maintaining the stability
