A Timeline of the Federal Open Market Committee
1913-1922: No Committee at All
The Federal Reserve Act of 1913 created no body resembling the modern FOMC. Each of the twelve Reserve Banks operated largely on its own, setting its own discount rate subject to review by the Board in Washington and buying and selling government securities for its own account, often simply to generate earnings. In the early 1920s the Reserve Banks noticed that their uncoordinated purchases were moving money market conditions and interfering with Treasury operations, so in 1922 and 1923 they established an informal committee, dominated by the New York Reserve Bank, to coordinate open market activity. It had no statutory authority. Its existence, however, established the principle that open market operations had to be conducted as a single national policy.
1933-1935: The Committee Becomes Statutory
The Banking Act of 1933 gave the coordinating body a legal foundation, creating the Federal Open Market Committee in statute, though the committee was still composed of representatives of the Reserve Banks and individual banks could decline to participate in operations. The Banking Act of 1935, driven by Chairman Marriner Eccles, produced the structure that survives today: the seven members of the newly renamed Board of Governors plus five Reserve Bank presidents, giving Washington a permanent voting majority and settling a long fight over whether monetary policy would be made in New York or in the capital. The same act removed the Treasury Secretary and the Comptroller of the Currency from the Board.
1951-1993: Independence, and Deliberate Silence
The March 1951 Treasury-Fed Accord ended the wartime pegging of Treasury yields and left the FOMC free to set policy on its own judgement. For the next four decades the committee exercised that freedom in near-total public silence. It did not announce its decisions. Markets learned what had been decided by watching the New York trading desk's operations and inferring the target from them, a practice known as Fed watching, and the minutes appeared only after a long delay. The prevailing view among officials was that ambiguity gave policy extra force and preserved room to change course, a doctrine sometimes called constructive ambiguity.
1994-2007: The Turn to Transparency
In February 1994 the FOMC announced a change in policy on the day it was made, for the first time in its history. The practice quickly became routine, and from the mid-1990s the statement specified the federal funds rate target explicitly. By the end of the decade the committee was issuing a statement after every meeting, including meetings at which nothing changed, and adding language describing the balance of risks it saw. Under Ben Bernanke the committee began publishing an expanded Summary of Economic Projections in late 2007, giving the public quarterly forecasts for growth, unemployment, and inflation from each participant.
2011-2019: Press Conferences and the Dot Plot
In April 2011 Bernanke held the first regularly scheduled post-meeting press conference, initially four times a year. In January 2012 the committee published its Statement on Longer-Run Goals — establishing the 2 percent inflation objective — and released the first version of the chart showing each participant's projection for the appropriate future path of the federal funds rate, which markets immediately named the dot plot. In January 2019, under Jerome Powell, the Fed began holding a press conference after every scheduled meeting rather than every other one, on the reasoning that markets should not treat some meetings as more live than others. Minutes are now published three weeks after each meeting, and full transcripts after five years.