The Fed runs the economy like an oven: it sets one number — the federal funds rate — to balance its dual mandate of stable prices (~2% inflation) and maximum employment. Drive the dial below and watch the trade-off the video describes. Every dotted number is a handle too.
Drag the rate dial. Raising it cools inflation but can cost jobs; lowering it boosts jobs but can stoke inflation. (Direction only — the video notes this is “not an exact science,” and USAFacts “does not forecast.”)
The Fed sets a floor (interest it pays on reserves) and a ceiling (what it lends at). The overnight interbank “federal funds rate” lives inside that band.
A rate change ripples down the chain. Set the dial above the ~3% “neutral” to tighten, below to ease.
Federal funds rate vs inflation, with the Fed's 2% goal. Drag the year. (Approximate annual figures — for shape, per the video; 2022 inflation shown at the video's “about 7%”.)
When rates aren't enough, the Fed buys bonds (money in → banks lend more → rates fall) or sells them (money out). It creates the money electronically.
19 people; only 12 vote on the rate. Tap to show the voters.
Built from the transcript of the cited USAFacts video for side-by-side comparison. The rate→inflation/employment relationships here are a deliberately simplified directional model to make the video's cause-and-effect tangible — not a forecast. Historical figures are approximate. Nothing here is financial advice.