The Federal Open Market Committee (FOMC) is responsible for conducting U.S. monetary policy to promote maximum employment and stable prices. The FOMC’s primary tool for adjusting the stance of monetary policy is by setting and adjusting the target range for the federal funds rate, which is the rate at which banks and other eligible Federal Reserve account holders borrow and lend reserves between each other on an overnight basis. In the Fed’s ample reserves implementation framework, the federal funds rate is kept within the target range primarily through the setting of administered rates, which are rates set directly by the Fed rather than by market forces, in conjunction with the Fed supplying sufficient levels of reserves to the banking system.
