Federal Reserve
The U.S. central bank — its rate decisions and forward guidance move global markets more than any other single institution.
The Federal Reserve (the "Fed") is the central bank of the United States, established in 1913. Its dual mandate is maximum employment and stable prices (targeting ~2% inflation). The Fed's main tools are the federal funds rate, open market operations, and the size of its balance sheet.
Because the U.S. dollar is the world's reserve currency, Fed policy reverberates globally. A hawkish Fed tightens global dollar liquidity, strengthens the dollar, and pressures emerging markets. A dovish pivot can ignite risk rallies across asset classes worldwide.
On the desk
In March 2020, the Fed cut rates to zero and launched unlimited QE within days of pandemic shutdowns. Global equities bottomed almost immediately, and risk assets roared back for the next 20 months.