The mandate
The operates under a dual mandate: stable prices and maximum sustainable employment. Nearly every policy decision is an attempt to balance those two objectives against each other.
The tools
The primary tool is the policy , which influences borrowing costs across the economy. Balance-sheet operations — buying or selling securities — affect longer-term rates and system . Communication itself is a tool, because expectations move markets before any action is taken.
Why gold learners follow it
Policy decisions influence real interest rates and the dollar, which are two of the most-discussed influences on the gold price. Following policy is therefore part of understanding the macroeconomic backdrop, not a method for predicting price.
Key takeaways
- The Fed targets maximum employment and stable prices.
- Fed decisions affect the dollar and real yields — and so gold.
Knowledge check
The FOMC meets roughly…
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