what is the federal open market committee fomc 
the federal open market committee fomc is the branch of the federal reserve system frs that determines the direction of monetary policy in the united states by directing open market operations omos the committee is made up of 12 members including seven members of the board of governors the president of the federal reserve bank of new york and four of the remaining 11 reserve bank presidents who serve on a rotating basis understanding the federal open market committee fomc the 12 members of the fomc meet eight times a year to discuss whether there should be any changes to near term monetary policy a vote to change policy would result in either buying or selling u s government securities on the open market to promote the healthy growth of the national economy committee members are typically categorized as hawks favoring tighter monetary policies doves who favor stimulus or centrists moderates who are somewhere in between 12the fomc chair is also the chair of the board of governors the current makeup of the board is as follows there are 12 federal reserve districts each with its own federal reserve bank these regional banks operate as extensions of the central bank the president of the federal reserve bank of new york serves continuously while the presidents of the others serve one year terms on a three year rotating schedule except for cleveland and chicago which rotate on a two year basis 6the one year rotating seats of the fomc are always comprised of one reserve bank president from each of the following groups 1the geographic group system helps ensure that all regions of the united states receive fair representation here are the 2024 fomc members 1fomc meetingsthe fomc has eight regularly scheduled meetings each year but they can meet more often if the need should arise the meetings are not held in public and are therefore the subject of much speculation on wall street as analysts attempt to predict whether the fed will tighten or loosen the money supply with a resulting increase or decrease in interest rates 1in recent years fomc meeting minutes have been made public following the meetings when it is reported in the news that the fed changed interest rates it is the result of the fomc s regular meetings 7during the meeting members discuss developments in the local and global financial markets as well as economic and financial forecasts all participants the board of governors and all 12 reserve bank presidents share their views on the country s economic stance and converse on the monetary policy that would be most beneficial for the country after much deliberation by all participants only designated fomc members get to vote on a policy that they consider appropriate for the period at the july 2023 fomc meeting the committee raised the fed funds rate to a target between 5 25 and 5 50 this was an increase of 25 basis points from the last increase in may 2023 at subsequent meetings the committee kept the target rate at the same level and confirmed the rate as of the last meeting which was on march 20 2024 89fomc operationsthe federal reserve possesses the tools necessary to increase or decrease the money supply this is done through omos adjusting the discount rate and setting bank reserve requirements the fed s board of governors is in charge of setting the discount rate and reserve requirements while the fomc is specifically in charge of omos which entails buying and selling government securities for example to tighten the money supply and decrease the amount of money available in the banking system the fed would offer government securities for sale 1securities bought by the fomc are deposited in the fed s system open market account soma which consists of a domestic and a foreign portfolio the domestic portfolio holds u s treasuries and federal agency securities while the foreign portfolio holds investments denominated in euros and japanese yen 10the fomc can hold these securities until maturity or sell them when they see fit as granted by the federal reserve act of 1913 and the monetary control act of 1980 a percentage of the fed s soma holdings are held in each of the 12 regional reserve banks however the federal reserve bank of new york executes all of the fed s open market transactions 10the process begins with the results of the meeting being communicated to the soma manager who relays them to the trading desk at the federal reserve bank of new york which then conducts transactions of government securities on the open market until the fomc mandate is met 11the interaction of all of the fed s policy tools determines the federal funds rate or the rate at which depository institutions lend their balances at the federal reserve to each other on an overnight basis the federal funds rate in turn directly influences other short term rates and indirectly influences long term interest rates foreign exchange rates and the supply of credit and demand for investment employment and economic output special considerationson jan 30 2024 the fomc reaffirmed its statement of longer run goals and monetary policy strategy 12this statement is based on the fomc s commitment to fulfilling a statutory mandate from congress to promote maximum employment stable prices and moderate long term interest rates because monetary policy determines the inflation rate over the long term the fomc can specify a longer run goal for inflation in the statement the fomc reaffirmed its analysis that a 2 target inflation rate was the rate most consistent with its statutory mandate 12