FOMC Meeting
The Federal Open Market Committee (FOMC) is the branch of the Federal Reserve System that is responsible for setting the nation’s monetary policy. The FOMC meets eight times a year to review economic and financial conditions and to determine the appropriate stance of monetary policy. The FOMC is composed of twelve members: the seven members of the Board of Governors of the Federal Reserve System; the president of the Federal Reserve Bank of New York; and four of the remaining eleven Reserve Bank presidents, who serve one-year terms on a rotating basis.
History of the FOMC
The FOMC was established by the Federal Reserve Act of 1913. The FOMC is responsible for setting the target for the federal funds rate, which is the interest rate at which depository institutions lend balances at the Federal Reserve to other depository institutions overnight. The FOMC also sets the discount rate, which is the interest rate charged to depository institutions on loans they receive from their regional Federal Reserve Bank’s lending facility.
The FOMC also has the authority to purchase and sell government securities in the open market in order to influence the money supply and the level of short-term interest rates. This is known as open market operations. The FOMC also has the authority to set reserve requirements for depository institutions, which are the minimum amounts of reserves that must be held by depository institutions.
Table of Comparisons
| FOMC Meeting | Federal Funds Rate | Discount Rate |
|---|---|---|
| January 2019 | 2.25-2.50% | 2.50% |
| March 2019 | 2.25-2.50% | 2.50% |
| June 2019 | 2.00-2.25% | 2.25% |
| July 2019 | 2.00-2.25% | 2.25% |
Summary
The FOMC is the branch of the Federal Reserve System that is responsible for setting the nation’s monetary policy. The FOMC meets eight times a year to review economic and financial conditions and to determine the appropriate stance of monetary policy. The FOMC is responsible for setting the target for the federal funds rate and the discount rate, and has the authority to purchase and sell government securities in the open market in order to influence the money supply and the level of short-term interest rates. For more information about the FOMC, visit the Federal Reserve’s website at https://www.federalreserve.gov/monetarypolicy/fomc.htm.
See Also
- Federal Reserve System
- Monetary Policy
- Federal Funds Rate
- Discount Rate
- Open Market Operations
- Reserve Requirements
- Interest Rates
- Money Supply
- Inflation
- Economic Growth
