Federal Open Market Committee (FOMC)

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What Is Federal Open Market Committee (FOMC)?

The Federal Open Market Committee, or FOMC, is the Federal Reserve committee responsible for setting U.S. monetary policy, most visibly the target for the federal funds rate. It has twelve voting members: the seven-member Board of Governors, the president of the Federal Reserve Bank of New York (a permanent voting seat), and four of the remaining eleven regional Reserve Bank presidents, who vote on a rotating basis. All twelve regional presidents join the discussion even when they are not voting. The committee typically meets eight times a year, and each meeting concludes with the release of the FOMC statement summarizing its decision. Detailed minutes follow about three weeks later.

Why It Matters

Because the FOMC sets the price of short-term money, its decisions ripple through mortgages, credit cards, business loans, and financial markets worldwide. The committee weighs its congressional dual mandate of maximum employment and price stability at every meeting, and it uses the release of statements, minutes, and quarterly projections to shape expectations. Historic examples show the stakes: in December 2008 the FOMC cut its target to a range of 0%-0.25% during the financial crisis, and in March 2020 it made an emergency cut to near zero as the pandemic hit. The Fed Chair leads the meeting and the post-meeting press conference, but each voting member casts an equal vote on the final decision.

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