The Federal Reserve plays a pivotal role in U.S. economic policy through its management of monetary policy, primarily using tools like interest rates and open market operations to influence economic activity. Its main goals are to promote maximum employment, stable prices, and moderate long-term interest rates. By adjusting the money supply and controlling inflation, the Fed aims to maintain economic stability and growth. Additionally, the Fed serves as a regulatory body for the banking system, ensuring financial stability and confidence in the nation's financial institutions.