In addition, the Fed is expected to contribute to financial stability by acting to  2  BIS Review 45/2009  contain financial disruptions and prevent their spread outside of the financial sector. Thus, we have been serving as a first responder to the crisis.
The Fed's basic policy tool for influencing economic activity and inflation is its ability to control very short-term interest rates – specifically, the federal funds rate, which is the rate that banks pay each other for overnight loans.