Few financial issues receive more attention in the press than the Federal Reserve Board's actions with interest rates. It seems there is always some mention of what its chairman, Janet Yellen, is saying or might say about the economy, interest rates or the markets in general. Ms. Yellen replaced Ben Bernanke, who retired in 2014.
The Federal Reserve, or Fed, is the independent central bank established by Congress in 1913. One of its primary functions is to help maintain the economic soundness of the US economy by setting the interest rates banks charge each other for overnight loans.
Thousands of banks in the country frequently borrow money or lend money to other banks for short periods, often just overnight. The Fed oversees that activity and sets the interest rates on the borrowing and lending. This type of institutional borrowing helps to keep liquidity in the financial system and the banking system strong.