Federal Reserve

Definition ∞ The Federal Reserve is the central banking system of the United States, responsible for monetary policy and financial stability. It influences the economy by managing interest rates, regulating banks, and ensuring the smooth functioning of payment systems. Its decisions have a broad impact on credit availability and economic growth.
Context ∞ The Federal Reserve’s monetary policy decisions, particularly concerning interest rates and quantitative easing or tightening, are pivotal for understanding broader market movements, including those in digital assets. Changes in the Fed’s stance can affect liquidity, risk appetite, and the perceived attractiveness of alternative investments like cryptocurrencies. Analysts closely monitor Fed communications for signals that might impact asset valuations and economic conditions.