Introduction Federal Reserve, also known as the Central Bank of America is one of the most powerful and influential economic institutions. Having been created almost a hundred years ago by the Congress, the Federal Reserve has played a major role especially during major economic crises like the World Depression of early 30s and the economic crisis of 2007. A part from its role in combating these crises, the Federal Reserve has constitutional powers, which allow it to be relevant to the Congress with the latter taking an oversight role. During the execution of its monetary powers, the Federal Reserve is guided by several aspects of its structure, which promote efficacy in service delivery to the people of America and in handling economic matters. This essay discusses the monetary policy as spelled out in the Federal Reserve Act and how it relates to the U.S economy today. Federal Reserve Unlike other financial institutions in the country, the Federal Reserve serves as the Central Bank and therefore has a wide range of special privileges that are important in its functioning. As such, it assumes the functions and attributes of such a bank in the American Financial sector (Saxton 2). As a lender of the last resort, the Federal Reserve is mandated to issue paper money to banks and is recognized as the banker for all government and commercial banks in the country. While acting as the lender of the last resort, Federal Reserve operates as a bank regulator in order to streamline banking sector within its constitutional responsibilities. Additionally, the operations of the Federal Reserve aim at centralizing reserves in the country; they encompass reserve management responsibilities and the monetary policy. In general, the Federal Reserve maintains the stability of the financial system and oversees the achievement of price within the financial sector (Saxton 2). Moreover, the significance of the oversight of the Congress in the functioning of the Federal Reserve is imperative. These functions are extremely important in determining the impact of the Federal Reserve in its management of expenditure and inflation-related issues (Saxton 3). In its implementation of the monetary policy, the Federal Reserve plays a major role in determining short-term interest rates, foreign exchange rates and varied prices within the market. In times of major financial crises like the ones experienced in 2007 and 2008, the bank plays a crucial role in inducing financial stability into the system while acting as the lender of the last resort. Monetary Policy As defined in the American constitution, the monetary policy is plays a core role in shaping and stabilizing the economy of the United States. Under the Federal Reserve Act, the Federal Open Market Committee and the Board of Governors are mandated to promote maximum employment for citizens, ensure stable prices and regulate long-term interest rates within the financial sector (Saxton 3). These three factors are highly interlocked and key determinants in understanding economic trends and implications. For instance, long-term stable prices guarantee sustainable economic growth and overall employment together with average long-term rates, which are charged as interest by financial institutions. It is also believed that long-term stable prices ens