Studies show that countries that have independent central banks, such as the Federal Reserve Bank, compared to those that have little or no central bank independence, have lower average rates of inflation.
The United States of America's central banking system is called the Federal Reserve System. With the passage of the Federal Reserve Act on December 23, 1913, it was established in response to the need for centralized control of the monetary system to prevent financial crises following a string of financial panics.
In the field of economics, inflation refers to an overall rise in the cost of goods and services throughout a nation. Each unit of currency may purchase fewer products and services as the general price level rises, hence inflation is associated with a decline in the purchasing power of money.
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