In addition to the rate, the Fed's actions influence the availability of credit. When the Fed is boosting the money supply -- for instance, by buying government bonds from the market -- lenders are more willing to extend credit.
At the eight regularly scheduled FOMC meetings a year, committee members decide how many securities to buy and at which maturities, after they pore over data and reports from across the country on the labor market, inflation and gross domestic product, a key indicator of the economy's output and health.
The committee then unveils their new target range for the federal funds rate, currently zero percent to 0.25 percent, and shares their projections in an announcement closely watched by traders and policymakers around the world. Within seconds, financial markets begin to adjust, affecting your pocketbook in the following seven ways.