Monetary Policy and the Federal Reserve: Current Policy and Conditions

"The Federal Reserve (Fed) defines monetary policy as the actions it undertakes to influence the
availability and cost of money and credit. Since the expectations of market participants play an
important role in determining prices and growth, monetary policy can also be defined to include
the directives, policies, statements, and actions of the Fed that influence how the future is
perceived. In addition, the Fed acts as a “lender of last resort” to the nation’s financial system,
meaning that it ensures continued smooth functioning of financial intermediation by providing
financial markets with adequate liquidity. This role has become of great importance following the
onset of the recent financial crisis..."