The demand for and supply of cash reserves provide the lever to central banks not only to modulate liquidity in the system but also to set interest rate in the money market. Through the calibration of monetary conditions by using instruments under its direct control, a central bank guides the operating target to the desired level.
The Committee will continue to assess the economic outlook in light of incoming information and is prepared to employ its tools as appropriate to promote a stronger economic recovery in a context of price stability. Economic policy and longer-term growth in the United States The financial crisis and its aftermath have posed severe challenges around the globe, particularly in the advanced industrial economies.