In the global economy, the Federal Reserve's actions have significant economic and financial effects around the world. Federal Reserve policies seek to help people and businesses by fostering a sound banking system and a growing economy, with maximum sustainable employment and stable prices. The Fed's monetary policy actions affect the overall level of prices, economic growth, and employment in the country. Monetary policy cannot target specific industries or regions within the country. Controlling inflation puts people out of work.
Stable prices help create jobs and raise incomes.
Fluctuating prices distort consumer and investment decisions, thereby adversely affecting employment and growth in the economy. The Fed sets interest rates at whatever level it pleases. The Fed influences short-term interest rates in the economy to achieve its goals of stable prices, maximum sustainable employment, and steady economic growth. The Fed is so powerful, it can ignore economic conditions in other countries. Global interdependence, through international trade and investments and exchange rate fluctuations, compels the Fed to consider economic conditions in other countries in its monetary policy decisions.