What Does the Fed Do? 
The Federal Reserve System is the quasi-governmental/quasi-private central banking system of the United States. Their job is to maintain a strong financial system promoting a stable economy. There are 12 regional Federal Reserve banks throughout the country. Essentially they act as a bank to the banks. Their goal is to provide the nation with a secure financial system. The Federal Reserves effect on interest rates and money supply is most important for traders and investors.
The Federal reserve effects the economy through the following operations:
* Raising and lowering the federal funds rate.
* Raising and lowering the discount rate.
* Controlling the money supply through open market operations.