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

One of the key functions of the Federal Reserve is managing inflation and stabilizing the economy. This is primarily accomplished through the implementation of monetary policy, which involves adjusting interest rates and controlling the money supply. By influencing interest rates, the Federal Reserve can encourage or discourage borrowing and spending, which in turn can help stabilize economic growth and keep inflation within target levels. A stable economy typically leads to a healthier job market and contributes to sustainable growth over time.

In contrast, establishing fiscal policy is the responsibility of the government rather than the Federal Reserve, which focuses on monetary policy. Regulating foreign banks falls outside of the core functions of the Federal Reserve as it primarily oversees domestic financial institutions. Controlling international trade is also not a function of the Federal Reserve; such responsibilities typically lie with government trade departments or specific trade agreements. Thus, managing inflation and stabilizing the economy remains a central and essential function of the Federal Reserve.