Tags: Money | Federal Reserve | FOMC

What Is the Federal Open Market Committee?

By    |   Thursday, 23 July 2015 03:55 PM

The Federal Open Market Committee (FOMC) is the 12-member panel of Federal Reserve officials — the nation's central bankers — who meet eight times a year to decide what steps to take to help keep the economy on an even keel.

The open market referred to in the title is the arena in which the Federal Reserve and other institutions buy and sell government bonds. Through open market operations, the Fed influences the overall economy by using its bond-purchasing power to increase or decrease the U.S. money supply and nudge interest rates up or down.

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The committee's job is to grade the overall economy, set targets for interest rates and inflation accordingly, and decide how to hit those targets.

"This involves meeting the demand for money at the target interest rate by buying and selling government securities or other financial instruments," according to the textbook, "Boundless Economics."

The committee meetings and the actions the Fed takes as a result are the core of monetary policy.

After it meets, The FOMC issues a summary of its findings on the state of the economy and gives a general sense of where the Fed will go in trying to uphold its dual mandate of price stability and sustainable economic growth.

The Federal Open Market Committee consists of: the seven members of the Federal Reserve's Board of Governors, including the chairperson (currently Janet Yellen); the president of the Federal Reserve Bank of New York; and a rotating group of four presidents drawn from the 11 other regional Fed banks.

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The Federal Open Market Committee (FOMC) is the 12-member panel of Federal Reserve officials - the nation's central bankers - who meet eight times a year to decide what steps to take to help keep the economy on an even keel.
Federal Reserve, FOMC
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2015-55-23
Thursday, 23 July 2015 03:55 PM
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