Fed's Rate Stance Ignites Inflation Fears Amid Dollar Devaluation

The Federal Reserve is the central bank of the United States, created by Congress in 1913 to stabilize the banking system and prevent financial panics. The Fed operates under a 'dual mandate' from Congress: keep inflation stable at 2% and maximize employment.

Its most powerful tool is the federal funds rate, the overnight borrowing rate that affects every loan, mortgage, and savings account in the country. Over the 112 years since its founding, the US dollar has lost approximately 97% of its purchasing power, a direct consequence of the Fed's expansionary policies.

As of July 29, 2026, the Fed held rates at 3.50%-3.75% for the fifth consecutive meeting, with three dissenting votes calling for a hike. The federal funds rate is the one that moves markets, and it has been held steady despite continued inflation above target.