●The Federal Open Market Committee (FOMC) is part of the Federal Reserve system and is responsible for open market operations.
● The Federal Open Market Committee meets eight times a year in Washington, and the outcome of its meetings is usually the focus of Wall Street.
● The Federal Open Market Committee consists of seven Fed board members and five Federal Reserve Bank governors.
Detailed explanation of concept
The Federal Open Market Committee (FOMC) is part of the Federal Reserve system and is responsible for open market operations.
FOMC meets eight times a year in Washington, but they can also hold ad hoc meetings in case of emergency.
During the meeting, FOMC will discuss the current state of economic development and forecast economic prospects, and all participants-- seven Fed board members and 12 Fed presidents-- share their views on the state of the country's economy and discuss which monetary policy is best suited to current economic conditions. Finally, the FOMC member who has the right to vote votes on the final result.
The FOMC meeting is not held in public, so it is closely watched and speculated by Wall Street. The stock market usually reacts strongly to changes in monetary policy. In recent years, the Fed has released the minutes of FOMC meetings after each meeting.
Member of the Federal Open Market Committee
The Federal Open Market Committee (FOMC) is made up of 12 members-seven members of the Federal Reserve Board; the president of the Federal Reserve Bank of New York; and the remaining four rotation seats are selected from the remaining 11 Fed presidents for an one-year term.
Eleven Federal Reserve banks are divided into four groups-Boston, Philadelphia and Richmond; Cleveland and Chicago; Atlanta, St. Louis and Dallas; Minneapolis, Kansas City and San Francisco-each group takes turns to select a bank president to enter the rotation seat.
The president of the Federal Reserve Bank who does not have the right to vote can still attend the FOMC meeting and participate in the discussion to contribute views and reference to the final monetary policy decision.
Committee members are usually divided into three types: hawks who support tighter monetary policy, doves who support stimulus packages, and centrist / moderates in between.
Generally speaking, the chairman of the Federal Open Market Committee is also the chairman of the Federal Reserve Board. Currently, the chairman of the Federal Reserve is JeromePowell, who was sworn in on February 5, 2018 for a four-year term. Powell is considered a moderate.