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Federal Reserve

The banks’ bank. The lender of last resort. The orchestrator of the U.S. economy. These words are often used to describe the central bank of the U.S., officially known as the Federal Reserve System.

Investors and economists alike obsess over every word and sentence that comes out of the Fed, whether from public speeches or statements issued after meetings by its policymaking arm, the Federal Open Market Committee (FOMC).

But even though the Fed’s work seems so complicated that only financial experts should care, the Fed’s decisions impact your wallet and can influence your financial decisions, arguably more so than any other policymaker in Washington. Understanding the world’s most powerful central bank will be more important now than ever in a year when markets are now bracing for the most rate hikes since 2005.

“The decisions that the Fed makes ultimately impact the interest rates that are relevant for everything that we do,” says Eric Sims, economics professor at the University of Notre Dame.

Here’s everything you need to know about the Fed, including what it does and the purpose it serves.