Federal Reserve

Three bodies share the name and they are not interchangeable. The Board of Governors sits in Washington and is appointed; the regional Reserve Banks operate the system and conduct its operations; and the Federal Open Market Committee is the body that meets and takes the decision on the policy rate. When a headline reports that the Federal Reserve raised or lowered rates, the body that did so is the third of these, and the distinction determines whose public remarks carry policy weight.

Its published output is the most extensive of any major central bank: a statement at each meeting, a press conference, projections including individual participants' expectations for the path of the rate, minutes after a short delay, and full transcripts after several years. That volume is why the dollar can move on a document rather than on the decision, and why the same decision can produce opposite reactions depending on what the accompanying material implies about the path.

Its reach extends past its own economy for two structural reasons. The dollar is the currency most international trade and borrowing is denominated in, so its policy rate sets the cost of dollar funding worldwide; and any economy running a peg to the dollar imports the decision directly, which is why several Gulf central banks follow it within hours and without a domestic debate.