The Federal Reserve plays a vital role in shaping economic policy in the United States by managing the nation’s monetary policy. It influences the money supply and interest rates to promote stable prices and employment levels. By adjusting the federal funds rate, the Fed can stimulate economic growth or curb inflation, influencing decisions made by individuals and businesses. Additionally, it acts as a lender of last resort during financial crises, ensuring liquidity in the banking system. Its policies directly impact overall economic stability and growth prospects.