The Fed conducts monetary policy through bank reserves, which are the portion of the deposits that banks and other depository institutions are required to hold either as vault cash or as deposits...
They influence the banking rates in order to stabilise the monetary policy. The way they influence (by increasing / decreasing interest mainly) is there primary and most powerful tool.
monetary policy is the use of money supply and interest rate to control the supply of money in an economy. Usually, the main use of monetary policy is to control inflation.e.g. when interest rate is...