What is one of the key roles of the Federal Reserve?

One of the key roles of the Federal Reserve is to control interest rates. The Federal Reserve, often referred to as the Fed, implements monetary policy primarily through the manipulation of interest rates. By adjusting the federal funds rate, which is the interest rate at which banks lend to each other overnight, the Fed influences overall economic activity. Lowering interest rates can stimulate spending and investment by making borrowing cheaper, while raising rates can help cool down an overheated economy by making loans more expensive. This mechanism is crucial for maintaining economic stability and controlling inflation, thus playing a significant role in promoting maximum employment and stable prices, which are the Fed's dual mandates.