What key aspect does the Federal Reserve oversee in relation to inflation?

The Federal Reserve plays a crucial role in overseeing interest rates as a key aspect of its strategy to manage inflation. By adjusting the federal funds rate, the Reserve influences the cost of borrowing money. When the Fed raises interest rates, it becomes more expensive to borrow, which can reduce spending and investment, ultimately leading to a decrease in inflation. Conversely, lowering interest rates can encourage spending and investment, stimulating the economy when inflation is too low. Thus, the Federal Reserve uses interest rate adjustments as a primary tool to maintain price stability and control inflationary pressures in the economy.

The other options, while interconnected with economic health, do not directly pertain to the Federal Reserve's primary responsibility regarding inflation. International trade impacts inflation indirectly through supply chains and demand fluctuations, stock market performance reflects investor sentiment and can be influenced by interest rates, and real estate values may be affected by interest rate changes, but none are direct mechanisms for managing inflation like interest rates are.