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Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two missions: achieving price stability and promoting full employment. The main tool to achieve these goals is interest rate regulation. When prices rise too quickly and inflation exceeds the Fed's 2% target, interest rates rise, increasing borrowing costs throughout the economy. This leads to a stronger US Dollar (USD) because it makes the United States a more attractive place for international investors to park their money. When inflation falls below 2% or Unemployment is too high, the Fed can lower interest rates to encourage borrowing, which puts pressure on the Greenback.