What does the Federal Reserve do on a regular basis to protect consumers and how do they relate to consumer protection?

Though the Federal Reserve does not have a role to play in
ensuring the quality of products that are sold, there is one aspect it can influence to
protect consumers and that is in controlling inflation. Inflation leads to an increase
in the price of all products and makes it difficult for consumers to buy what they want
to.

The reasons behind inflation are basically divided into
two categories, one is referred to as cost-push. This is due to an increase in the price
of raw materials of production and cannot be controlled by the
Fed.

The other category referred to as demand-pull is
inflation due to a rapid increase in the consumption of goods. The easy availability of
credit is responsible for this to a large extent.

The Fed
can control demand-pull inflation by raising interest rates. With higher interest rates
consumers are vary of borrowing funds to buy products; with a drop in demand the prices
also decrease.

Increasing interest rates also helps in
another way. It gives people who would have spent the money with them immediately to buy
products an incentive to delay this and instead invest their money to earn a reasonable
rate of interest.

In this way the Fed too can protect
consumers though in an indirect way.