The Fed Chair's Tightrope
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The Fed Chair's Tightrope
With the Federal Reserve in the spotlight again, here are five numbers that frame the conversation.
Length of a Fed Chair's Term
The Chair of the Federal Reserve serves a four-year term, appointed by the President and confirmed by the Senate. But here's the nuance most people miss: the Chair also holds a separate 14-year term as a member of the Board of Governors. That means a President can replace the Chair but can't easily remove them from the Board entirely.
Source: Board of Governors of the Federal Reserve System
Peak Fed Funds Rate (2023–24 Cycle)
The Federal Reserve raised its benchmark rate to a range of 5.25–5.50% during the most aggressive tightening cycle in four decades. This range held for nearly a year before cuts began. For context, this same rate was effectively 0% as recently as early 2022.
Source: Federal Reserve — Federal Funds Rate History
Federal Reserve District Banks
The Fed isn't a single entity — it's a system of 12 regional Reserve Banks spread across the country, from Boston to San Francisco. Each district bank monitors economic conditions in its region and contributes to monetary policy discussions. The presidents of these banks rotate as voting members of the Federal Open Market Committee.
Source: Federal Reserve — Structure of the Federal Reserve System
The Fed's Inflation Target
The Federal Reserve's stated goal is to keep inflation at roughly 2% per year, measured by the Personal Consumption Expenditures (PCE) index. This target wasn't formally adopted until 2012, though it had been an informal benchmark for years. Getting back to 2% after the post-pandemic surge has proven far more difficult — and far slower — than most models predicted.
Source: Federal Reserve — Statement on Longer-Run Goals
Fed Balance Sheet
At its peak in 2022, the Fed's balance sheet swelled to nearly $9 trillion — roughly 36% of GDP — after years of bond-buying programs. The "quantitative tightening" process to unwind those holdings has been slow and deliberate. The balance sheet remains well above pre-pandemic levels, and the long-term implications for markets and monetary policy are still being debated.
Source: Federal Reserve — Factors Affecting Reserve Balances (H.4.1)