How do the monetary policies made by the Federal Reserve System's Board of Governors affect the economy?

The Federal Reserve System in the United States acts as a central bank. Mostly through the lead bank, the Federal Reserve Bank of New York, it operates within the general framework of US national goals and objectives established by the executive and legislative branches of the US government. However, its methods of going about this is, unless certain circumstances arrive, is an independent course of action that seems best for the US, once again on a general basis.

As a central bank it operates in the economic sphere of the US & world economy. The NY Fed, as it is termed, has an influence on the availability and cost of bank reserves, bank credit, and monetary policy. As a central bank it affects the availability of reserves to support bank deposits. For the most part, this is done by its open market operations. The NY Fed buys and sells for its own account mostly securities issued by the US Treasury Dept. along with its authority to vary reserve requirements.

If this sounds complicated it is. The NY Fed also affects monetary policies by setting a discount rate for overnight borrowing among its member banks in the USA. The bank also influences monetary policy by buying and selling world currencies.